
    GEBHARD REUSCHER, Plaintiff and Appellant, v. FREDERICK KLEIN, Defendant and Respondent.
    I. Mortgage Chattel. —Manufacturers’ Lien.
    1. Bight of mortgagee of chattel made for the mortgagor and completed, but in possession of the manufacturers, who have a lien, on it for a balance remaining unpaid of the pnñce of its manufacture.
    
    1. He takes the interest of the mortgagor subject to the lien.
    3. Where the makers, after the execution of the mortgage, sold and delivered, with the mortgagor’s consent, the chattel to a third person, on the terms that they shall receive the balance of the price of manufacture remaining unpaid, and that the mortgagor shall also receive the amount paid by him on the price of the manufacture, which terms are complied with by the third person,
    
      Held, 1. The makers’ lien became extinguished.
    2. The interest of the mortgagee to the extent of the amount paid by the mortgagor on the price of the manufacture of the chattel became the first lien.
    3. The mortgage being due, the mortgagee had a right to take possession and foreclose under it.
    II. Referee, finding of, on questions of fact, toen not disturbed.
    Before Barbour, Ch. J., Curtis and Sedgwick, JJ.
    
      Decided April 5th, 1873.
    Appeal from judgment in favor of defendant, entered upon the report of a referee.
    The action is to recover the value of a wagon taken by the defendant from the plaintiff’s possession. The wagon was with other chattels mortgaged by the firm of B. Geils & Steinecke, June 5th, 1868, to the defendant. It was then at the wagon-makers’, completed, having been made for Geils & Steinecke, and a partial payment having been made of the price for making and lettering it by B. Geils, one of the firm. The defendant justifies the taking of the wagon under this chattel mortgage. The plaintiff purchased the wagon of the wagon-makers, with the consent of B. Geils & Steinecke, on the 24tli of September, 1868, paying them in •cash and installments what was due them upon it, and also paying B. Geils the $100, which he had paid the wagon-makers on account for the price of making it. The defendant foreclosed his chattel mortgage on the 18th of August, 1868, by talcing possession of and selling the mortgaged chattels other than the wagon, which was in possession of the makers, and which was for that reason, or from being overlooked, not included in the sale. He received $476 from that sale, and there remained due to him about $1200 from the mortgagors, D. Gfeils & Steinecke.
    The plaintiff claims that no title or interest in the wagon had vested in the mortgagors at the time of the execution of the mortgage, and that if there had, all the interest that the defendant took under the mortgage in this-wagon, if any, was, after the foreclosure in respect to the other chattels, extinguished by the following instrument which the plaintiff put in evidence:
    “New Yoke, August 18th, 1868.
    “Received from J. F. Badenhop the sum of four-“hundred and seventy-six dollars on account of money “realized out of the sale on the mortgage executecL “ by Dederich Gfeils and Franz Steinecke to Frederick “ Klein, dated the 5th day of June, 1868 ; for the balance “ remaining Oeils & Steinecke give their note to me. v “Frederick Klein.”
    The defendant testified that the last clause being the words “for the balance remaining Oeils & Steinecke' give their note 'to me,” were not in the instrument when he signed it, but had been “forged in” since he executed it. This was contradicted, but the referee came to-the conclusion that the evidence of the defendant must prevail, and so found.
    The referee reported in favor of a dismissal of the complaint with costs. From the judgment entered upon this report, plaintiff appeals.
    
      J. Frederick Badenhop, attorney, and C. C. Egan, of counsel for appellant,
    urged :
    I. The chattel mortgage, under and by virtue of' which the defendant claimed a right, never legally covered the property in question. Gfeils & Steinecke,. at the time of its execution, had neither the ownership ■of the property, nor the possession, nor the right of possession, and therefore could neither mortgage nor sell (Burt v. Dutcher, 34 N. Y. 493; Hyde v. Lathrop, 3 Keyes, 597; Pierson v. Hoag, 47 Barb. 243; Morgan v. Gregg, 46 Barb. 183).
    II. Geils & Steinecke having failed to pay the manufacturer for the wagon, never, at any time, acquired title to it, and of course could convey none ; but whatever right or interest the defendant acquired from Geils ■& Steinecke, he waved verbally, and in writing, and by his subsequent acts.
    III. If the mortgage had any validity whatever, it had been foreclosed, the effect of which was to extinguish its existence. By such foreclosure and by his .subsequent acts, the defendant was estopped from reasserting any claim under the mortgage (Garlinghouse v. Whitwell. 51 Barb. 208; Hutchins v. Hubbard, 34 N. Y. 24).
    IV. The referee was clearly in error in finding, from the evidence, that the receipt was a forgery. The weight of disinterested evidence, and the acts of the defendant consistent with its genuineness at the time of, and prior, as well as subsequent to its execution, established its genuineness beyond any doubt. The rule is well settled, that when the finding of a fact upon which the recovery rests, is against the weight of evidence, the judgment will be reversed and a new trial ordered (7 How. Pr. R. 64, 66; 1 Caines, 162; 6 Hill, 444, 451; 20 How. Pr. R. 384; 6 Bosw. 191; Townsend Man. Co. v. Foster, 51 Barb. 346).
    Besides, the defendant (upon whose testimony alone the genuineness of the last clause in the receipt, Ex. B, is impeached) was contradicted by two disinterested witnesses (Wisser and Florence) upon two material points (see Wright v. Paige, 3 Keyes, 581, affirming 36 Barb. 438; Burnett n. Harris, 50 Barb. 379, 29 Barb. 617; Hannah v. McKellip, 49 Barb. 342; Brett 
      v. Gatlin, 47 Barb. 404; Bemis v. Kyle, 5 Abb. Pr. R., N. S. 232).
    
      V. The plaintiff (appellant) derived his title from "both Geils and Steinecke, and the manufacturer (Wisser) as-well; and in addition had the consent of the defendant to, and his acquiescence in, plaintiff’s purchase of the property from the manufacturer (see Fielden v. Lahens, 6 Abb. Pr. R., N. S., 341; Treadwell v. Sackett, 50 Barb. 440; Davis v. Grove, 2 Robt. 134; Id. 635.
    YI. The judgment should be reversed, with costs, and a new trial ordered.
    
      F. Sherman Smith, attorney, and James M. Smith, of counsel for respondent.
   By the Court.—Curtis, J.

The referee having, after hearing the testimony and examining the instrument of August 18th, 1868, the appearance of which he considered as sustaining the defendant’s testimony, and taking in view the improbability that the defendant would agree to take the note of an insolvent firm for the balance of his debt, came to the conclusion that the evidence of the defendant must prevail; we see no reason for a departure from the usual rule in such cases, that the findings of fact by the referee should remain undisturbed.

Considering, therefore, that the clause in question was fraudulently added to the instrument after its signature by the defendant, the point arises as to whether the defendant took any interest or title in the wagon under the mortgage to him. It had been made for the mortgagors, and partially paid for by them, but was in the makers’ possession and subject to their lien upon it for the balance, at the time of the execution of the mortgage to the defendant. The defendant took the interest of the mortgagor, subject to the lien of the makers. The makers took no steps to enforce their lien upon it, and upon being paid the amount due them, and with the consent or by the direction of the mortgagors, delivered the wagon into the possession of the plaintiff. By the payment of the sum due the makers, and the payment to D. Greils, the plaintiff became the purchaser and owner of the wagon, and of all claim or interest therein of the mortgagors, free of the lien of the makers. But this interest in the wagon for which he paid the mortgagors $100, and which both he and they recognized as a subsisting interest, had been mortgaged to the defendant, and upon the extinguishment of the preceding lien of the makers, became the first lien upon the wagon. The defendant’s mortgage remaining in full force, as soon as. the wagon was freed from the makers’ lien, the defendant had a right, as it was then due, to proceed to take possession, and foreclose under it.

The foreclosure of the mortgage by the defendant in August, 1868, by taking possession of and selling such, chattels as he then could, cannot operate to prevent him from enforcing his lien upon the wagon at such time as he should become entitled to the possession of it under the mortgage, when he appears to have acted in good faith and not inequitably.

There is nothing in the exceptions taken by the plaintiff to the rulings of the referee upon the admission of evidence, that calls for a review of the findings of the referee.

The judgment entered upon the report of the referee should be affirmed, with costs.

Sedgwick, J. (dissenting).

Weisser, the wagon-maker, who made the wagon for Diedrich Greils, of the firm of Greils & Steinecke, had never delivered it to the latter, nor had the latter ever become entitled to-a delivery of it, he having paid of the price, $503, only $100. Therefore the title to the wagon was in Weisser, and not in Diedrich Greils. The latter could not mortgage what he did not own, and never be came possessed of. Weisser having the title, could and did transfer it by sale to Reuscher (34 N. Y. R. p. 493, Burt v. Dutcher). I do not think that the plaintiffs knoAvledge that the wagon, before its sale to him, had been mortgaged to the defendant, affects the plaintiff’s title. All that the mortgagee got under the mortgage, being Biedrich Geils’ right under an executory contract of sale, it was no encumbrance upon the title, to which the plaintiff was bound to yield.

If we suppose that the plaintiffs purchase was the ■consequence of an understanding between him and the mortgagor, that such a sale would prevent the mortgagor’s obtaining the title from the wagon-maker, by tendering the sum due, and if such understanding was •unlawful against the mortgagee, and although that, as a matter of supposition, might give an action for damages, for trespass on the case, still such unlawful conduct does not prevent the title passing according to the rales ■of law. On any other supposition the wagon-maker would not have the legal right to do what was not unlawful with his own property.

I therefore am obliged to differ Avith my learned associates who have taken a different view of the case.  