Argued March 23d 1870, by respondent and submitted by appellant
Decided June 21st, 1870
John H. Reynolds, for the appellant.
A. McDowell, for the respondent.
The only case referred to by the appellant's counsel which is in point, is that of Chadwick v. Lamb (29 Barbour, 518); and it was there decided, that an action to recover the value of personal property wrongfully converted, may be maintained by the chattel mortgagee, although the money secured by the mortgage is not yet due, if there is a clause in the mortgage which authorizes the mortgagee, at any time he shall deem himself insecure, to take possession of the mortgaged property and sell it to satisfy the debt.
But that doctrine was expressly repudiated by this court in Hall v. Sampson ( 35 N.Y., 277), where the court, PORTER, J., said: "The execution of the chattel mortgage invested the plaintiff with title, subject to be dissolved by subsequent performance of the condition. The right of possession ordinarily follows that of property, and both would have passed under the transfer, in the absence of any express or implied agreement for the retention of the goods by the mortgagor. It has been held in some of the cases, that no such agreement can be implied from provisions substantially like those contained in the present mortgage. ( Rich v. Milo, 20 Barb., 616; Chadwich v. Lamb, 29 id., 518.) The court below held otherwise, and in their conclusion on this branch of the case we concur. The mortgage specifically defined the circumstances under which the mortgagee should become entitled to the right of possession; and this evinces the mutual intent of the parties, that, until it vested in the mortgagee, it should remain in the mortgator. His possessory right was to terminate on failure to pay the debt at the time named, or at such certain time as might be fixed by the election of the mortgagee, if, in good faith, he should deem himself insecure. On the 29th of June, there had been no breach of the condition; and we entertain no doubt, that Walpole" (the mortgagor) "had then an interest in the piano which justified the defendant in taking it under the attachment."
The case of Mattison v. Baucus only decides that when the chattel mortgage is such, that the mortgagee is to have, possess, occupy and enjoy, the mortgaged property, whenever he shall demand the same, and he has taken the possession thereof by virtue of the mortgage, that it is not thereafter the subject of a levy upon execution against the mortgagor, although the mortgage debt had not become due.
Under the rule laid down in Hall v. Sampson, the rights of the mortgagor and mortgagee are the same as they would have been, if the mortgage had contained the express condition that the mortgagor was to continue in the possession until default in payment, or until the mortgagee should deem himself unsafe, and should in consequence thereof take possession. And under such a mortgage as that, the rule clearly is that, prior to such default or taking possession, the mortgagor has an interest in the mortgaged property, which may be levied upon by execution against him, and will authorize the sheriff to take the property into his possession and sell it without reference to the mortgage, and 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. ( Hall v. Sampson, supra; Hull v. Carnley, 11 N.Y., 50; Same v. Same, 17 N.Y., 202; Goulet v. Asseler, 22 N.Y., 228.)
It is equally clear that, while the mortgagors retained possession, they could sell and deliver the mare to the defendant, and that he took all the interest the mortgagors had thereto, and held it subject to the mortgage, whether he was aware of its existence or not; and on the 26th of October, there being no default in the payment, and no possession taken by the mortgagee, he had the right to dispose of it to Oliver, who also took it subject to the mortgage, and the remedy of Hathaway was to follow it and recover it from his possession. This he did not do, either under the safety clause or after default in the payment of the mortgage, but suffered it to remain in his possession until it died of a disease which it had when the mortgage was executed; and a demand for the mare, made upon the defendant in the following February, did not authorize him to support the action. The defendant had the right to purchase and exchange the mare away as he did, and he was not guilty of a conversion either in acquiring or parting with his interest in her. The judgment of the Supreme Court should be affirmed.