
    Woodworth v. Hodgson et al.
    
    
      (Supreme Court, General Term, Fifth Department.
    
    April 11, 1890.)
    1. Fraudulent Conveyance—Stook of Goods—Change of Possession.
    A father having guarantied the business indebtedness of his son, a bill of sale of the son’s stock in trade was executed and delivered to the father about 7 o’clock in the evening. The parties then went to the store, and shortly thereafter the father locked the door, and handed the key to his son. Before the son opened the store the following morning it was seized under executions against him. Held, that whether there had been an, actual change of possession was a question for the jury.
    .8, Chattel Mortgages—Bill of Sale.
    The testimony of both father and son showed that there had been no conversation between them in regard to the transaction, except that the former should be “secured, ” and there was no evidence that there had been any bargain between them by which the one should sell and the other buy the property. Held, that the instrument, though absolute in its terms as a bill of sale and delivered by the son to the father, would be regarded as a chattel mortgage only.
    Appeal from Monroe county court.
    Action by Clark Woodworth against Thomas C. Hodgson and another, originally brought in the municipal court of the city of Rochester, and taken by appeal to the county court, where there was a verdict and judgment for plaintiff, from which defendants appeal.
    Argued before Dwight, P. J., and Macomber and Corlett, JJ.
    
      M. W. Cooke and William, B. Hale, for appellants. J. M. Dunning, for respondent.
   Macomber, J.

This action is brought against the defendants, who are respectively the sheriff and deputy-sheriff of Monroe county, to recover for the value of a certain stock of groceries claimed by the plaintiff, and alleged to have been converted by the defendants to their own use. The answer justifies the seizing and disposal of the goods under a judgment and an execution properly issued, the particulars of which it is not necessary to detail. The position of the defendants is that the property, the value of which is thus claimed by the plaintiff, was fraudulently disposed of by one W. A. Wood-worth, a son of the plaintiff. The case turns upon this issue. William A. Woodworth had resided with his father in the town of Gates, adjoining the city of Rochester, when, in the month of November, 1887, he began the business of conducting a grocery store on the corner of Kent and Platt streets, in the city of Rochester. To enable the son to start in business, the plaintiff executed for his benefit two promissory notes, in the sum of $600, upon which the money was obtained for the use of the son. Subsequently the plaintiff signed two letters of credit to certain wholesale groceries in the city of Rochester, by which the son was permitted to purchase goods to the amount of $300, and the payment of the same was guarantied by the plaintiff. Within a short time the fact was developed that the business was unremunerative, and this was known to the plaintiff. It continued, however, until the evening of the 23d of July, when a bill of sale, absolute in its terms, of all of the property of the son, was executed and delivered to the plaintiff. Thereupon, as is claimed, in his behalf, the plaintiff took possession of the store and its contents. It is at this point where the two questions in the case come in. At the close of the plaintiff’s case, as well as at the close of the whole testimony, a motion was made in behalf of the defendants in the one instance for a nonsuit, and in the other for a direction of a verdict for the defendants, upon the ground that the taking of the property by the plaintiff under the bill of sale was fraudulent, and that there had been no transfer of possession of it within the meaning of the statute. 2 Rev. St. c. 7, tit. 2, §§ 5, 9; 3 Rev. St. (6th Ed.) 148. Treating, for a moment, the bill of sale as an instrument, which upon its face it purports to be, a fair question of fact was presented whether or not there had been such a change of possession of property from the son to the father as to satisfy the conditions of the statute. After the bill of sale had been executed by the son at the law office of the plaintiff’s attorney, in the evening, the father and the son and the clerk of the latter went to the store together, and shortly thereafter the father locked the door, and handed the key thereof to the son. This was on the evening of the 23d of July. The bill of sale was executed about 7 o’clock in the evening. After the locking of the door and the delivery of the key to the son, and before the son had opened the store on the following morning, the same had been seized under the execution already mentioned. The learned county judge did not see in this situation of affairs that there was any question of fact cognizable by the jury. In this we think he was in error. The testimony of these two witnesses, father and son, even if they had not been interested in the event of the action, was of such a character, in the most favorable construction of it, as to require the same to be submitted to the jury, and for them to determine whether or not there was an actual change of possession. Adams v. Davidson, 10 N. Y. 309; Bullis v. Montgomery, 50 N. Y. 352; Tilson v. Terwilliger, 56 N. Y. 273; Steele v. Benham, 84 N. Y. 638.

But there is another and more comprehensive reason why this judgment must be reversed. The instrument executed by the son to the father, as has already been stated, was in form a bill of sale, yet it was claimed upon the trial in behalf of the defendants that it was designed, at the most, only as security to the plaintiff for the liabilities which he had incurred in behalf of his son, and that it was a chattel mortgage only. The same was not at any time filed as a chattel mortgage, and consequently it is insisted with great force by counsel for appellants that the instrument was void as to the defendants who represent creditors. Whether or not this was a security or an absolute transfer of property was the most serious question in the ease. The plaintiff testified that the first time his son ever spoke to him about a bill of sale, or about securing himself for his liability was at his (the son’s) house. The fact that the son was doing a constantly losing business was known to the plaintiff. Indeed, the son, according to his testimony, spoke to him two or three times to the effect that he ought to be secured. On the 15th of July he says that they came to the conclusion that they would do something about it. The plaintiff then continues: “He had spoken two or three times not a great while before that about securing me. The interview July 15th was at his house. The substance of his remarks was like this: That he was sure he was losing ground, and wasn’t picking up, and he didn’t think he could go through, and, as I had furnished means for his getting almost everything he had, I ought to be secured. The security which he wanted to give me was for the letters of credit and notes. He spoke to me about securing me with a chattel mortgage. * * * I told him to go and see Mr. Dunning, and counsel with him as to the method he should pursue.” It appears, therefore, from the plaintiff’s own testimony, that there had been no conversation between him and his son except for his security. The case is devoid of any evidence that there had been any bargain between the parties by which the one should sell and the other should buy the stock of groceries. How could there be a sale without a bargain of some sort? The talk of the parties seems to have been wholly for the purpose on one side to proffer, and the other to receive, some instrument as security only. When, therefore, this instrument, through absolute in its terms, was executed, and delivered by the son to the father, it was, as between them, a chattel mortgage only; the circumstance that it is in the form of a bill of sale is unimportant. The true inquiry is, what was it in fact, as understood by the parties to it at that time? Ro moneys were advanced to his son by the plaintiff at any time, but he was liable to be called upon for such advances by reason of his connection with the business paper, and as a guarantor of his son’s indebtedness. The statute is imperative that an instrument of this description, which is designed for the security of a debt, must be filed in order to be good against creditors. A bill of sale absolute upon its face, transferring property to be held as security for the payment of a debt due the vendee, is in character and effect a mortgage, and is to be treated as such. Smith v. Beattie, 31 N. Y. 542. The judgment appealed from should be reversed, and the new trial granted, with costs to the appellants to abide the event. All concur.  