
    Nelson T. Barrett, as Receiver of the Property of William H. Beyers, Plaintiff, v. William G. Mack and William H. Beyers, Defendants.
    (Supreme Court, Erie Equity Term,
    August, 1909.)
    Chattel mortgages — Recordation — Original filing — Possession as curing failure to file.
    A failure to file a bill of sale intended as security for a debt at the time it is given, there being no immediate change of possession of the property, renders it void as to existing creditors of the seller.
    But where, a few months after the execution of such a bill of sale, the seller voluntarily delivered possession of the property covered thereby to the buyer who sold it as his own, and there is no fraud in the transaction, an action to recover the property or its value, upon the ground that the bill of sale was not filed, cannot be maintained at the instance of a judgment creditor whose judgment was recovered subsequently to the change of possession.
    Action by a receiver in supplementary proceedings to recover property covered by a bill of sale given by the judgment debtor.
    Martin & Geyer, for plaintiff.
    George P. Keating, for defendants.
   Wheeler, J.

The substantial facts of this case are that, on August 31, 1907, the defendant William H. Beyers was indebted to the defendant William G. Mack in the sum of $3,000. To secure the payment of this indebtedness, most of which was for moneys advanced on that day, Beyers gave Mack a chattel mortgage covering property with which this action has nothing to do; and, as additional security for the payment of this indebtedness, Beyers gave Mack a bill of sale covering certain horses, harnesses and wagons, for the recovery of which this action is brought by the plaintiff as receiver of the property of William H. Beyers under a judgment recovered against said Beyers.

The bill’ of sale in question was not filed until some time in the December following. The evidence tends to show that Mack went into immediate possession of the property covered by the bill of sale, and continued in possession of the.property until the first day of February, 1908, when he sold the property, and that Beyers was employed by Mack to look after the property until about November 1, 1907.

Whether Mack or Beyers was in possession of the property prior to November first, is, in our opinion, immaterial to the disposition of this case; for, on or about the first day of November, Beyers, seeing that the business was not paying, became discouraged, and told Mack to take the property and save himself. As Beyers expressed it, he “ laid down.” In any event, it appears that Beyers surrendered to Mack his equity of redemption in this property; and, on or about that day, Mack did take possession of the property and held it until he sold the property in February following. Mack paid all rent, feed bills, and other expenses incident to the business, and also took all the earnings; and, so far as the evidence shows, Beyers, from that time on, never claimed or asserted any right or interest either in the property covered by the chattel mortgage or the bill of sale.

On the 22d day of January, 1908, the Faramel Company recovered a judgment against Beyers; and, upon this judgment, proceedings supplementary -to execution were subsequently had and the plaintiff in this action was appointed receiver of the property of the defendant Beyers. Accordingly, this action was brought to recover the property covered by the bill of sale, or its value, on the ground that the bill of sale was made prior to the time of its delivery, and was not accompanied by immediate possession.

The court is satisfied from the evidence that there was no fraud in the transaction between Mack and Beyers; that the indebtedness assumed to be secured was perfectly valid, and that the chattel mortgage and bill of sale were not made with the purpose or intent of cheating or defrauding the' creditors.

It simply remains, therefore, a question of law whether the failure to file the bill of sale in question at the time of the giving of the same vitiated it and rendered the subsequent transactions void as against the judgment creditor whom the receiver in this action represents.

We think the plaintiff cannot reach the property, or recover in this action. It is true that the failure lo file the bill of sale, there being no change of the possession of the property, rendered, it void as against creditors then existing (Karst v. Gane, 136 N. Y. 316) ; and, had the judgment creditor in this action recovered a judgment and made a levy upon the property covered by the bill of sale prior to the defendant Mack taking possession of the same, there would be no question that the bill of sale would have been declared void as against an execution in the hands of the sheriff. But it appears that, before any such thing had been done, before even a judgment had been recovered, Beyers, the person who executed the bill of sale, voluntarily delivered possession of the property covered by it to the defendant Mack; and he did, in fact, actually take the same into his possession and control. This very question was up for adjudication in the case of Stephens v. Perrine, 143 N. Y. 481, where the court said: “ If, before any lien had been acquired by the creditors, the mortgagors had delivered the property to the mortgagee in payment of her debt, she could have then held it because it would have been in such a case a transfer of property by them in payment of their debt, and although it would have been in fact preferring such debt, yet. it would have been a preference which the mortgagors then had the right to make.”

If there had been no bill of sale executed, and Beyers had said to the defendant Mack: I can go no further, take this property and save yourself,” and, acting under such authority, Mack had taken the property without the existence of any bill of sale, there can be no question, in our opinion, that it would have been a valid transfer in payment of his indebtedness, and that he would have had a right to the same as against any judgment creditors.

In the case of Castleman v. Mayer, 55 App.Div. 515; affd., 168 N. Y. 354, it was held that where, at the time of the execution of a chattel mortgage which was not filed, the delivery of the possession of the chattels was only color-able, and where, by the express terms of the mortgage, it was contemplated that the mortgagor should remain in possession, and the change of ownership and possession were intentionally concealed from the public, the subsequent act of the mortgagor in delivering the actual possession of the property to the mortgagee and the subsequent sale by the mortgagee would, in the absence of fraud on the part of the parties to the transaction, be sustained as against a general creditor of the mortgagor whose claim had accrued at the time when the mortgage was given, but who did not recover judgment thereon until after the actual delivery of possession of the mortgaged property by the mortgagor to the mortgagee.

We, therefore, are of the opinion that these cases must be held decisive of the case before us.

Let findings be drawn accordingly, and judgment entered dismissing the plaintiff’s complaint, with costs.

Judgment accordingly, with costs.  