Opinion
June Term, 1858
John H. Reynolds, for the appellant.
S.O. Shepard, for the respondents.
The provision in the lease amounted to a valid mortgage of the furniture then in the hotel. There was a concurrent contract, made upon good consideration, for the payment of money at future periods, and it was lawful to secure the debt thus created by a conditional conveyance of the personal property.
No question arises upon that part of the clause which professes to mortgage the property which Griffin should thereafter purchase and place in the hotel, as no portion of the recovery is on account of such property; and the case will afford no countenance to the idea that such an arrangement could be sustained as a mortgage. If it could be done, I do not see but that the remedy of distress for rent might be restored by the act of the parties in spite of the will of the legislature.
The omission to prepare and annex an inventory to the instrument does not affect its validity. The title to the furniture passed, by way of mortgage, at the execution of the lease. The instrument was, by its terms, intended to be operative from that moment. The making of an inventory was an act to be subsequently performed.
The principal point insisted on in the brief of the counsel for the defendant is, that he is to be considered as representing creditors, or as a purchaser in good faith, and that he can therefore avoid the mortgage because it was not filed pursuant to the act of 1833 ( ch. 279). To support this position the counsel relies upon what was said by Chancellor KENT, in Dey v. Dunham (2 John. Ch. R., 188), to the effect that a conveyance to pay debts was a valid conveyance founded on a good consideration. He accordingly decided that the plaintiffs in the suit before him, who were assignees in trust for creditors, were to be regarded as bona fide purchasers in such a sense as to enable them to avoid a prior unregistered mortgage. The decree in that case was reversed on another ground in the Court for the Correction of Errors. (15 John., 555.) The learned chancellor himself appears to have afterwards changed the opinion which he expressed in that case; for in Haggerty v. Palmer (6 John. Ch. R., 437) he held that a voluntary assignee for the benefit of creditors could not avoid an equitable right to goods of the assignors resting in a third person. In Slade v. Van Vechten (11 Paige, 21), Chancellor WALWORTH decided that a voluntary trustee under such an assignment was not a bona fide purchaser, within the meaning of the statute which protects the title of such a purchaser of goods subject to execution before an actual levy.
In regard to commercial paper, it has long been settled that no person can claim the title of bona fide holder who receives the bill or note on account of a precedent debt, there being no new consideration nor anything parted with by the indorsee at the time. The cases upon this point are mentioned in the opinion of Judge JOHNSON, in Youngs v. Lee (2 Kern., 551). The principle of these cases is analogous to that under consideration.
In Dickerson v. Tillinghast (4 Paige, 215), the question was between the holder of an unrecorded mortgage and a subsequent grantee of the mortgaged premises, the consideration of whose purchase was a precedent debt. The case was very much discussed at the bar, and was examined by Chancellor WALWORTH with great care. He came to the conclusion that the mortgagee was entitled to the priority. He considered the principle of equity to be well settled, that if one take title to real estate in payment of, or as security for, a previous debt, without giving up any security or divesting himself of any right, or placing himself in a worse situation than he would have been if he had received notice of a prior equitable title or lien previous to his purchase, a court of equity will not permit him to retain the title, which he had thus obtained, to the injury of one having a prior equity.
When the act respecting the filing of chattel mortgages was passed, the term bona fide purchaser had acquired a settled meaning, which did not include a person whose purchase was on account of an existing debt, and who parted with no property or right to obtain his conveyance. The case of a conveyance of a debtor's property to trustees, to enable him to make preferences among his creditors, does not stand on a better footing than a transfer to a single creditor as security for his debt. From the nature of the case, the creditors part with nothing. They are not necessarily or usually consulted. They take precisely what the conveyance gives them, and they part with no existing rights. The property is subject to the same equities, in the hands of the trustees, which existed against it immediately before the execution of the assignment.
When a conveyance is said to be void against creditors, the reference is to such parties when clothed with their judgments and executions, or such other titles as the law has provided for the collection of debts. The beneficiaries, under the voluntary assignment to the defendant, are not in a condition to claim the rights of creditors or to question the prior dispositions of their debtors which he could not himself have avoided.
It follows that the judgment of the Supreme Court ought to be affirmed.
COMSTOCK, J., was absent; all the other judges concurring,
Judgment affirmed.