24 N.Y. 359, Ford v. Williams

• Citation: 24 N.Y. 359
• Party Name: FORD et al. v. WILLIAMS.
• Case Date: March 01, 1862
• Court: New York Court of Appeals

Page 359

24 N.Y. 359

FORD et al.

v.

WILLIAMS.

New York Court of Appeal

March 1, 1862

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COUNSEL

Stephen K. Williams, appellant, in person.

George F. Comstock, for the respondents.

DENIO, J.

The chattel mortgage under which the plaintiffs claimed title was not illegal on account of anything contained in it; and, having been filed according to the statute, it was capable of being sustained against the creditors of the mortgagor by proof sufficient to rebut the inference of fraud arising out of the retention of possession by him. So far as concerned the debt which it professed to secure, the proof of bona fides was satisfactory. The plaintiffs indorsed a note to enable Sutherland to raise money at a bank, to pay off a judgment against him upon which an execution had been issued; and the mortgage now in question was given to indemnify them for their indorsement. So far, the transaction was quite fair and honest. But if the debtor was permitted, not only to retain the possession of the property mortgaged, but to sell it out by retail, on his own account, as he had been doing before the mortgage, we think, with the judge who tried the case, that the arrangement would be fraudulent and the security void. But it would not have been inconsistent with the nature of the transaction, or with good faith, that the mortgagees, by themselves or their agent, should have been permitted to sell the goods by retail, for cash, and apply the money which they

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might bring towards the discharge of the debt which the mortgage was given to secure. This was what the plaintiffs professed to prove, only they made the mortgagor, instead of a third person, their agent. He, according to his own testimony and that of one of the plaintiffs, was to sell, in effect, as the agent of the mortgagees; for he was to sell only for cash, and was to apply the money towards paying the note. An arrangement in these terms might have been merely colorable, and a device to protect the property against the pursuit of other creditors. I would not advise a creditor to take a mortgage of such property, accompanied by such an agreement, for, in most cases, a jury would regard it with great suspicion, and would be apt to consider it a fraudulent contrivance; but such an arrangement may possibly be made without any improper views. Whether, in a given case, it was fair or fraudulent, would be a question of fact for the jury to determine. (2 R. S., p. 137, § 4.) It would be otherwise, if the question depended upon the effect of a written instrument, as we held in Edgell v. Hart (5 Seld., 213), or if it should arise upon an admitted or undisputed state of facts which showed an arrangement quite inconsistent with fairness and honesty, as where such an arrangement as that existing in Edgell v. Hart was made by parol outside of the mortgage; but where the transaction, though suspicious, is capable of a construction consistent with fairness and the absence of fraud, it must be passed upon by the jury. The charge in this case was in accordance with these views; and, if the defendant has failed to receive justice, it was not for...