
    The Eastern Brewing Co., Respondent, v. Charles Feist, Appellant.
    (Supreme Court, Appellate Term,
    November, 1897.)
    Chattel mortgages — Notice of prior unfiled chattel mortgage — Duty, to inquire — Bona fide purchaser.
    Proof that, when a saloon-keeper was about to give a chattel mortgage to a corporation, a notary public, who was about to take the acknowledgment of the mortgagor, stated to the president of the corporation that there was a prior chattel mortgage on the property, and that, after an affidavit of the mortgagor, relative to existing liens, had been changed so as to set up an existing mortgage of $85 upon the front and back bar, the mortgagor acknowledged the mortgage and the president of the corporation accepted it, is sufficient evidence to put the corporation upon inquiry as to the existence of the prior chattel mortgage; and although it was never filed, a purchaser, upon a sale iti a foreclosure made under it,- is entitled to hold the chattels as against the corporation.
    Appeal from judgment rendered by the justice of the' First Judicial District Court in favor of the -plaintiff.
    Greene & Johnson, for appellant.
    J. C. Guggenheimer, for respondent.
   Bischoff, J.

The plaintiff held a chattel mortgage upon the-saloon fixtures contained in the premises No. 92 Lewis street, one Katie Gelb being the mortgagor, and this action was brought for conversion of the chattels by the defendant, who had succeeded to the occupancy of the premises and had refused to deliver the property to the plaintiff upon demand duly made in accordance with the rights of the latter under the mortgage, the circumstances being such as to entitle the plaintiff to possession as against the mortgagor.

The defendant claimed title by virtue of the purchase of the chattels at a sale had under foreclosure of a mortgage, prior in date to that held by the plaintiff, hut which had not been .placed on record at the time when the last-mentioned paper was executed, and the issue in the case was as to whether or not the plaintiff had, or was chargeable with, actual notice of this earlier mortgage sufficient to give it validity, as between these parties, notwithstanding the failure to file it, for which failure, as against subsequent bona fide purchasers and incumbrancers, the statute rendered it void.

This prior mortgage was held as. security for the .purchase price of the chattels and had been executed, to .the party who .had manufactured them, by Isidor Gelb, the husband of the plaintiff’s mortgagor, and from whom she derived title by a bill of sale.

One Newman, a notary public, knew of the existence of the mortgage given by Isidor Gelb, and, when called upon to take the acknowledgment of Katie .Gelb, upon the execution of her mortgage- to the plaintiff, he ’stated to Katz, the president of the company and its sole representative at" the. time, that there was the outstanding lien.

' - Newman testified that he had refused to take the acknowledgment of the mortgagor, since the instrument, in so far as it recited the absence of all prior liens, contained, to his knowledge, a state- " ment which Was not true,' and while this witness’ testimony, with ’ regard to certain statements made by Katz during the transaction, -was contradicted by the latter, it was admitted that Newman had spoken to him of this ¿arlier mortgage and that an affidavit, annexed ■ to the present mortgage and prepared by the plaintiff for signature by the mortgagor, was then altered so as to allege the existence of . a mortgage for the sum of $85 on the front and back bar.

As thus altered in the handwriting of Katz, the affidavit was signed by Katie Gelb, her acknowledgment of the mortgage was then taken by Newman and the instrument was delivered to Katz, who accepted it for the plaintiff.

Under the circumstances it is difficult for the plaintiff to escape the imputation of notice of this prior incumbrance and we think it should be held that the mortgagee was put upon its inquiry, at-least with regard to the lien upon the front and back bar, which, as appears from the proof, were by far .the'most valuable of the fixtures and for which the greater part of the.recovery in this action was had. " ...

• In this aspect the case appears to be with the defendant, the .preponderance of the evidence not being in favor of the plaintiff’s right to make .a demand for the feturn of the fixtures, and a new trial should be had in the interests of substantial justice. •

Judgment reversed-and new-trial ordered, with costs to appellant -to abide the event.

Daly, P. J., and McAdam, J., concur.

• Judgment reversed and new trial ordered, with costs to appellant to abide event. " " ■ " ■ " ■  