Opinion
Argued February 15, 1877
Decided March 20, 1877
Samuel Hand, for the appellant. Frederic A. Ward, for the respondent.
The judge on the trial held that the instruments executed between the parties on the 28th of August, 1873, constituted a mortgage from the plaintiff to the defendant, on the stock of goods and personal property mentioned therein to secure the payment to the latter of $2,000, for his capital invested in the firm of Bragelman Daue, and the debts of the firm then existing, which, as the evidence tends to show, were assumed by the defendant. Treating, therefore, the instruments as a mortgage, which is, we think, the real nature of the transaction, the rights of the respective parties are easily ascertained. The defendant acquired by the mortgage a defeasible title to the mortgaged property, which would become absolute on the failure of the plaintiff to pay the sum secured or any part thereof when it should become due. ( Charter v. Stevens, 3 Den., 33.) It was not necessary that the mortgage should declare that this result would follow the omission of the plaintiff to pay the money at the time specified, or that non-payment should work a forfeiture. This is an incident attending the relation of mortgagor and mortgagee of chattels, and the mortgagor must pay according to the terms of his undertaking, or else his rights at law are terminated. In this case the money secured by the mortgage was payable in installments, the first of which fell due October 28th, 1873, and was not paid. The goods were then in the actual possession of the plaintiff, but as agent for the defendant.
The defendant, in consequence of the plaintiff's default, was the absolute owner of the goods, with the right of possession, but there remained in the plaintiff an equity of redemption liable to be extinguished by a valid sale of the property by the mortgagee.
The defendant on the 4th of December, 1873, took the goods into his actual custody. Soon after, this action was commenced, which in substance is an action by the mortgagor to redeem. The learned judge, at Special Term, found that the taking of the property by the defendant, on the 4th of December, 1873, was, as to the plaintiff, a conversion, and he directed an accounting and adjudged that the defendant account to the plaintiff for the proceeds and value of the goods, after deducting the $2,000 secured by the mortgage, with interest. To this finding, that the defendant should account for the value of the goods, the defendant excepted. We think this exception was well taken.
The taking of the goods by the defendant, on the 4th of December, was not a conversion. The defendant, in taking them, was exercising a legal right, and interfered with no right of the plaintiff. By virtue of his ownership of the goods, he was entitled to the possession. When the action was tried, a part of the goods had been sold by the defendant, but a part were still in his possession, and in the judgment which the plaintiff finally recovered, was included the value of the goods unsold, thereby compelling the mortgagee, in an action for redemption, to become the purchaser of a portion of the mortgaged property, and to take it at a valuation determined by the court. This part of the judgment was, we think, erroneous.
If, on the accounting, it appeared that the defendant had received sufficient from the proceeds of the goods sold by him to pay the plaintiff's debt, the goods remaining in his possession should have been adjudged to belong to the plaintiff, but we see no ground for compelling the defendant to take them at a valuation, and pay the plaintiff therefor as upon a purchase by him. For this error we think the judgment should be reversed, and we do not consider the other questions raised, in respect to the accounting.
The judgment should be reversed and new trial ordered.
All concur.
Judgment reversed.