
    James V. Bigelow and Clayton J. Bigelow, Appellants, v. Harry A. Goble and Others, Respondents.
    
      Conversion—rights of chattel mortgagees, as against purchasers of the property of one mortgagor sold at a sheriff’s sale under an execution against the other mortgagor — a mortgagee may recover the entire value of the property as against a stranger.
    
    In an action brought by the assignees of a chattel mortgage given by one George Teeter and Delphine, his wife, to secure a debt owing by the husband to the mortgagee, it appeared that the consideration of the mortgage was expressed as $350, while the amount of the debt owed by Teeter was $235. It was claimed that part of the mortgaged property, which belonged to Delphine Teeter, was added to the mortgage and more than $100 was added to the amount thereof with the purpose of defrauding her creditors, but no proof was made upon the trial that she had any creditors. After the plaintiffs had become by assignment the owners of the mortgage, a creditor of George W. Teeter recovered a judgment against him, and the sheriff sold the mortgaged property belonging to Delphine Teeter to the defendants.
    The plaintiffs claimed in their complaint the possession of the property under the clause usual in chattel mortgages, allowing the mortgagor to take possession whenever he deemed his demand to be unsafe.
    
      Held, that the mortgage was not fraudulent as being one given to hinder, delay and defraud the creditors of Delphine Teeter, as no proof whatever had been made that she had any creditors at the time when the mortgage was executed;
    That as the defendants were not creditors of Delphine Teeter, and as she had at all times insisted upon her title, the plaintiffs, holding under her by mortgage duly recorded, were entitled to recover the property as against the defendants, who, as mere purchasers at the sale, were strangers to the title and had no right to redeem from the mortgage, nor to an accounting from the plaintiffs as to the amount still remaining unpaid upon the mortgage;
    
      .That, as against the defendants, the plaintiffs were entitled-to recover the full value of the property; and that, as to any surplus of value, over and above the amount due on the .mortgage, the plaintiffs would stand as trustees, to the extent of the interest of the mortgagor in' the property.
    ■ Appeal by the plaintiffs, James Y. Bigelow and another, from an ..order of the: Supreme Court, made at the Yates Circuit and entered in the office;of the clerk of the county of Yates on the 11th day of December, 1895, denying the plaintiffs’ motion for a new trial'made upon the minutes, after a trial at the Yates Circuit on the 2d day of December, 1895, which resulted in a verdict in favor of the plaintiffs for twenty-four dollars. .
    
      M. A. Leary, for the appellants.
    
      D. A. Marsh, for the respondents,
   Green, J.:

This action was brought to. recover of the. defendants the value of a pair of horses, a lumber wagon and a double harness, alleged .to have been wrongfully withheld by the defendants from the plaintiffs.

. On the 8th day of December, 1894, George W. Teeter and Deb phiné Teeter, his wife, for the purpose of securing an indebtedness-. of $235, owing by George W. Teeter to Lorenzo Bartholomew, duly executed and delivered to lfftn a chattel mortgage upon certain property, .including the property for the value of which- this action is brought, payable with interest one year from its date. The mortgage was duly filed in the proper office December 12, 1894; Jaffa-, ary 3, 1895, the mortgagee assigned the mortgage to the plaintiffs for the consideration of $225, which was duly paid. The consideration expressed in- the mortgage was $350,. which was over $100 inore than the amount owing by George W. Teeter, to Bartholomew. Bartholomew claims.that the extra amount was- inserted at.the request of Mrs. Teeter, and for that reason was included in the mortgaged property belonging to her, which is the property in suit. Bartholomew claims' that it was agreed that, if Mrs. Teeter should purchase 'some real property which she had in view, he would-loan her. $100 and exchange the chattel mortgage for a real estate mortgage on the. place to be purchased. This was never done. It is claimed on behalf of defendants and by- the Teeters, who testified in the action^ that the extra $100 was added to .the consideration of the mortgage, and that the property belonging to Mrs. Teeter was included in the.mortgaged property for. the purpose of protecting the same for Mrs. Teeter against her creditors.

After the assignment of the mortgage by Bartholomew to plaintiffs, one Ira Raplee recovered a' judgment against George W. Teeter; upon that judgment an execution was issued to the sheriff, and by virtue thereof he levied upon the property mentioned in the complaint, and the defendants became the purchasers at - that sale. Before this action was commenced, a demand of this property was duly made upon the defendants, which was refused, and this action was brought.

The defendants, in their answer, allege, as a defense and justification, that the amount secured by the mortgage has been fully paid; that they are the owners of this property by virtue of the purchase thereof at the sheriff’s sale of the same, and, further, that the mortgage was given for more than the amount George W. Teeter owed Bartholomew; they further allege in their answer that, before the commencement of this action, “The said Delphene Teeter, mentioned in said complaint as one of said mortgagors, who, it is alleged in said complaint, with said George Teeter, mortgaged said team and said harness to one I. S. Bartholomew, said plaintiffs’ assignor, had brought an action in the Supreme Court against said Washington D. Hayes (who was the deputy sheriff who levied upon said property by virtue of the execution on the judgment obtained by Raplee against George W. Teeter), for the recovery of the value of the said team and said harness and other chattels, and that, at the time of the beginning of this said action, the same was pending undetermined.”

It appears from the evidence and is undisputed, that Delphine Teeter, at the time of executing with her husband the mortgage to Bartholomew, was the owner of the property for the value of which this action is brought. It is undisputed, too, that at the time of the sale of this property by the sheriff, upon execution issued upon the judgment against George W. Teeter, the chattel mortgage, was on file in the proper office, as provided by statute, and that there was nothing upon the files of said-office to show that the same had been paid, and nothing to show but that the same was a valid and existing lien at that time upon the property described therein. It appears ¡also •from-the-answer of these • defendants that Delphine Teeter ■claimed to be the owner of that property at the time of its sale by the sheriff, as she instituted an action in the Supreme Court against ■the officer making the sale, and claimed therein that she -wás the owner of the property, and had been unlawfully "deprived of the same.

The defendants claimed to be the owners of, and entitled to the possession of, this property, by virtue of the purchase made at the sale thereof by the sheriff under the execution issued upon the judgment against George W. Teeter. They were not, ,and did not pretend to be, creditors of Delphine Teeter; in fact there. is no evidence in the record which shows that Delphine Teeter had any creditors. Upon the trial, the judgment roll in that action, the execution issued thereon, and evidence of the levy and sale were admitted by the learned trial justice, under the objection and exception of plaintiffs. The plaintiffs insisted that the judgment of Raplee against Teeter, the issuing of the execution, the levying upon Mrs. Teeter?s property by virtue thereof, and the purchase at the sale of such property by these defendants, was no defense to this action. That question was fairly raised upon the trial, and the learned trial justice decided adversely to the" contention of the plaintiffs. We think this was error on the part of the learned trial justice. He charged the jury to the effect that, so far as the creditors of the husband were concerned, they would have a right take- possession of this property ;. and it seems that a levy was made upon. the property to satisfy his debt; and, if Mrs. Teeter saw fit to allow that property to be taken and sold to satisfy his debt,

I charge you, as matter of law, that these plaintiffs cannot question that transaction.” Again, upon this same question, he uses this language: “ I charge you as matter of law, if he made the levy upon this team in question, which was in possession of Mr. Teeter and his wife, and she saw fit to let that team be sold to satisfy his debt, no person can question it except herself; these plaintiffs are not in a position to question it.”

A careful examination of the. evidence and of this record fails to disclose anything tending t-o show that Mrs. Teeter consented to this levy upon the property, or that she turned the same out in satisfaetion of the judgment, or that she in any way acquiesced in any of the acts of the sheriff concerning that property. On-the other-hand, it appears from the answer of these defendants that she objected to the same, and promptly brought a suit against the officer who made the sale for the recovery of the value of the property, and that'that action was pending undetermined at the time of the commencement of this action. This appeared at the very threshold of this action, and no evidence was given upon the trial changing such situation or attitude of the parties interested in this property. The plaintiffs after such sale commenced this action, claiming to be the owners of the property by virtue, of a chattel mortgage held by them upon the same, and entitled to the possession thereof by virtue of the clause therein which provides that, if they should at any time deem themselves unsafe, it should be lawful for them to take possession of the property, and to sell the same at public or private sale, previous to the time therein mentioned for the payment of the debt. In their complaint they allege that they did deem themselves unsafe, and elected to take advantage of such clause and to enforce the payment of the amount secured by said mortgage. The property in question had been transferred into the possession of these defendants, and they claimed to be the owners thereof and entitled to the possession of the same. The plaintiffs were unable to obtain possession of the property upon demand of these defendants; it had passed from the possession of their mortgagor. The defendants had no claim against Delphine Teeter, and no process was in the hands of the sheriff, authorizing him to levy upon her property, or to pass the legal title thereof to any person who should purchase from him. These plaintiffs were the owners of this mortgage. The property of Mrs. Teeter, which had been transferred to the possession of these defendants, was covered by that mortgage. The plaintiffs saw the property passing from the possession of their mortgagor, and, under the circumstances, they clearly had a right to question that transfer, but, as we have seen, the acts of the sheriff were not acquiesced in by Mrs. Teeter, and, therefore, there was no basis for the submission of that question to the jury.

It is claimed by these defendants, also, that the mortgage was fraudulent in its inception, and evidence was given which they claim tends to substantiate that position. That the mortgage was fraudulent át its inception was not alleged in the- answer. Át the close of the evidence, however, the court, under "objection by- plaintiffs counsel, allowed the defendants to amend their answer to conform with evidence in the case upon the question of fraud; the.'plaintiffs-.'excepted-to the allowance of the amendment. We are of the Opinion "that this ruling was error. It was claimed by the defendants that the evidence of plaintiffs disclosed that, at the time of the inception of the mortgage, the consideration of the mortgage was expressed as the sum of $850, and that this was $100 more than the debt of Geotge W. Teeter, which it was the original intention of the parties to secure by this chattel mortgage, and that it appears from the testimony of defendants’ witnesses that the mortgagee and Delphine Teeter agreed that her property should be included in the mortgage, and the $100 added to the consideration thereof, for the purpose of covering the property of Mrs. Teeter, so that the same could not be reached by her creditors. It is claimed, therefore* that this mortgage was fraudulent so far as the property of Delphine Teeter ’is concerned, because it was given and taken with the intent to defeat, defraud and delay the creditors of Mrs. Teeter in the collection of their debts. The difficulty with this position is, that nowhere in the evidence is it disclosed that Delphine Teeter owed a dollar, or had any creditors at the time of the execution of this mortgage, and, therefore, the claim that this mortgage'was fraudulent utterly fails.

The defendants were undoubtedly entitled to show on the trial of the action that the amount, secured by this mortgage had been fully paid; in that event these plaintiffs would have had no title to this property, and would not have been entitled to the possession thereof; but further than this -the only question to be considered between these parties was the value of the property converted. This is an action at law, and the defendants, who were strangers to the mortgage under which plaintiffs claimed, had no right to an accounting from these plaintiffs as to the amount still remaining unpaid upon this mortgage.

It is true that had this action been against Delphine T.eeter, the mortgagor, or against those “ standing in her shoes,” the recovery would have been limited to the amount due on the mortgage. (Parish v. Wheeler, 22 N. Y. 494, 511, 515; Hinman v. Judson, 13 Barb. 629; Haskins v. Kelly, 1 Robt. 171; Livor v. Orser, 5 Duer, 501, 506; King v. Van Vleck, 40 Hun, 71.)

But these defendants did not stand in such position; they are neither general creditors nor judgment creditors of Delphine Teeter, and, not having any right to redeem, are not in a position to mitigate the damages to the amount unpaid on the mortgage.

, We are of the opinion, therefore, that the charge of the learned trial justice, that the plaintiffs would be entitled to recover only the amount shown to be iinpaid on their mortgage, was error, calling for a reversal of the order.

In an action against a stranger, who shows no right or title to the property, the mortgagee may recover the full value though it exceeds the amount of the mortgage debt. (Parish v. Wheeler, supra; Adamson v. Petersen, 35 Minn. 529; Jones Ch. Mort. § 448.) But the sum recovered must be held by him upon a trust corresponding to the interests of the mortgagor in the property. (Id.)

The jury in this action rendered a verdict representing, as it appears, only the balance unpaid upon the mortgage. It appears from this verdict, therefore, that the jury must have found that some portion of the mortgage still remained unpaid. The plaintiffs, then, were entitled to the possession of the property at the time of the demand made therefor upon the defendants. The defendants refused to deliver the same, and thereupon they became' liable to these plaintiffs for damages to the extent of the value of the property converted by them. But, under the ruling of the learned trial justice, the jury, have ignored the rule of damages which should have governed them in rendering their verdict; and they found as damages only the balance unpaid upon the mortgage, instead of the value of the property converted.

The record contains no certificate that the case contains all of the evidence. It, however, clearly appears that the question of damages was submitted' to the: jury upon an erroneous theory of the law governing that question, and that the plaintiffs were prejudiced thereby.

A new trial should be ordered.

All concurred.

Order reversed and a new trial ordered, with costs to abide the event.  