
    SEWARD F. GOULD, Respondent, v. JOHN R. MARSH, Appellant.
    
      Chattel mortgage—right of assignee of—promissory note secured by — rights of holder of.
    
    A bona fide purchaser, before maturity, of a promissory note, secured by a chattel mortgage, takes the mortgage as he takes the note, free from any equities which existed in favor of third parties while it was held by the mortgagee.
    
      Carpenter v. Longan (16 Wall., 271) followed.
    Appeal fl-om a judgment in favor of the plaintiff, entered upon the report of a referee.
    On the 20th day of May, 1870, James Morton, then being the owner of the property described in the complaint, consisting of the printing-presses, etc., of the Avon Journal printing-office, sold and delivered the same to Jane Cotter, in consideration of $3,000, on which purchase she paid, on or about that day, $500, and for a further payment she gave to Morton her note of $500, dated that day, indorsed by James R. Cotter, her son and agent, payable sixty days after date. Morton indorsed the note and attempted to get it discounted, but failed to do so. James R. Cotter, claiming to be the agent and attorney, in fact, of his mother, on the 25th of May, 1870, procured the indorsement of John R. Marsh, the defendant, upon said note, and, to secure him for the liability thus assumed, he executed, as agent for his mother, a chattel mortgage upon said property. This mortgage was delivered by the defendant to Morton, with a request to file it in the town clerk’s office, which he agreed to do. Morton did not file it, but retained it in his possession until about September 10, 1870, when Marsh, learning it was not filed, procured it of Morton and had it filed in the proper town clerk’s office.
    On the 10th of June, 1870, Mrs. Cotter gave to Morton three promissory notes for the aggregate sum of $2,000, the residue of the purchase-price of said property, payable, respectively, January 20, 1871, July 20, 1871, and June 20, 1872, and a chattel mortgage on the same property to secure their payment, which was filed on the next day in the town clerk’s office. A few days after the execution of these notes and the mortgage, the first of the notes was presented tb the plaintiff, a banker at Avon, for discount, by Morton, who informed him it was secured by a mortgage which was a first lien upon the property. After examining the records, the plaintiff discounted the note.
    On the 25th of October, 1870, Morton assigned the other two notes and the mortgages to one R. P. Flower, who subsequently assigned them to the plaintiff. The note indorsed by the defendant went to judgment, and nothing was ever paid upon it.
    On the 17th of February, 1871, plaintiff took possession of the property, by virtue of the mortgage to Morton, and advertised it for sale. The sale was postponed to the fourth of March, when it took place, and the property was bid off by the plaintiff.
    The defendant advertised the property under his mortgage, and sold it on the first of March, purchasing the property himself.
    Subsequent to the sale by the plaintiff, and his purchase of the property, he demanded it of the defendant, who refused to deliver it, and this action was brought to recover its possession, and it was delivered to him by the sheriff.
    
      M A. Rash, for the appellant.
    The lien of the plaintiff’s mortgage was subsequent -to that of the defendant. (Van Heusen v. Radcliff, 17 N. Y., 580; Tiffany v. Warren, 37 Barb., 571; Wiles v. Clapp, 41 Barb., 645; Thompson v. Van Vechten, 27 N. Y., 570; Woodburn v. Chamberlin, 17 Barb., 452; Dickerson v. Tillinghast, 4 Paige, 220.) Plaintiff’s rights were no greater than those of Morton. (Schafer v. Reilly, 50 N. Y., 61; Bush v. Lathrop, 22 id., 535; Mason v. Lord, 40 id., 476.)
    «TóAí A. Vcmderlip, for the respondent,
    cited Green v. Hart (1 John., 580); Langdon v. Buell (9 Wend., 80); Jackson v. Blodget (5 Cow., 202); Rose v. Baker (13 Barb., 232); Parmelee v. Dann (23 id., 461); Freeman v. Auld (44 N. Y., 57); Carpenter v. Longan (16 Wall., 271).
   E. Darwin Smith, J. :

By the express terms of the statute, the defendant’s mortgage, before it was filed, was absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith.

The notice to Morton, of the defendant’s mortgage, and his fraud, in keeping possession of it and not putting it upon file, according to his agreement and the trust confided to him, till after the mortgage to himself was taken and filed, preclude him from the rights of a subsequent mortgagee or purchaser in good faith.

The single question remains, whether the plaintiff, as the assignee of the second mortgage, acquired any higher rights from Morton, than he possessed by the transfer of the promissory notes, which such second mortgage was given to secure.

If the said mortgage was regarded by itself, or as a security for a bond, or any other non-negotiable chose in action, no question would remain open to discussion on this point, since the decision of Bush v. Lathrop, affirmed, as it has been, in Schafer v. Reilly, Sheldon v. Edwards and Thompson v. Van Vechten, and other cases.

But in the case of Schafer v. Reilly, supra, Judge Allen, as does Judge Denio in Bush v. Lathrop, recognizes the fact, that a purchaser of a chose in action must abide by the ease of the person from whom he bought. The rule admits of exceptions, “ adopted from motives of public policy,” as -Judge Allen stated it, “ either to promote the negotiability of commercial instruments, or to prevent fraud.”

Within this exception, I think the plaintiff is entitled to the rights of a bona fide purchaser, in respect to said mortgage, as the holder of the. promissory note for $666.68, dated May 10th, and due June 1st, 1871, discounted and received by him at his bank, in the ordinary course of business, in the month of June, 1870, and before the defendant’s mortgage was placed on file.

The transfer of said note was, in law and equity, an assignment or transfer of the mortgage given to secure it, to the extent of the amount of said note. The notes which said mortgage was given to secure, constituted the debt, and the mortgage was the incident, and, by presumption of law, passed with the transfer of the debt.

A mortgagee hs, pro tanto a purchaser, and the assignee of a mortgage, without notice, is on the same footing with a bona fide mortgagee. In such cases, the purchaser looks to, and has a right to rely upon, the record, and if that shows no lien or incumbrances prior to the mortgage, he has a right to trust to the protection of the statute.

The referee asserted these views, in accordance with the decision of the Supreme Court of the United States, in Carpenter v. Longan, where the rights in respect to mortgages, given to secure negotiable instruments, are fully discussed and very carefully considered, and the doctrine asserted, that the purchaser of a negotiable security before its .maturity, secured by a mortgage, takes the mortgage, as he takes the note, free from the objections to which it was liable in the hands of the mortgagees. That the note and mortgage are inseparable; the former as essential, the latter as the incident. This view, it seems to me, is eminently sound, and I think unanswerable. The referee held in accordance with this case, and his judgment should be affirmed.

Present—Mullin, P. J., Smith and Gilbert, JJ.

Judgment affirmed. 
      
       22 N. Y., 535.
     
      
       50 N. Y., 61.
     
      
      
         35 N. Y., 279.
     
      
       27 N. Y., 568.
     
      
       Pierce v. Faunce, 47 Maine, 507.
     
      
       16 Wallace, 271.
     