Opinion
March 3, 1916.
James C. Cleary, appellant, in person.
Dwight P. Dilworth, for the respondent.
Defendant is indebted to plaintiff in the sum of $950 and interest, for which plaintiff has recovered judgment. In March, 1914, defendant was also indebted to Grace Cleary in the sum of $500, to secure payment of which he gave her a chattel mortgage upon certain personal property. In April, 1914, Grace Cleary assigned to plaintiff the said chattel mortgage and the moneys due or to grow due thereunder as "collateral security" for the payment of defendant's indebtedness of $950 to plaintiff. Neither debt having been paid at maturity, plaintiff now seeks to replevy the mortgaged chattels, claiming an absolute ownership thereof by virtue of the chattel mortgage and the default in payment.
If the assignment had been to plaintiff absolutely, as to a purchaser, this claim would be well founded, but it is generally held that an assignment of a chattel mortgage, as the present one was assigned, merely as "collateral security" for a debt other than that covered by the mortgage itself, amounts to a pledge of the mortgage, and invests the pledgee with only a special property in the chattels mortgaged. (Jones Chat. Mort. [5th ed.] § 5a; Haskins v. Kelly, 1 Abb. Pr. [N.S.] 63; Mitchell v. Roberts, 17 Fed. Rep. 776.) Indeed plaintiff itself seems to have understood that it held the mortgage only by way of pledge, for when it became necessary to extend the mortgage, and to make and file a certificate for that purpose, the plaintiff stated in said certificate: "That the interest of the undersigned in said mortgage is that of a pledgee of said mortgage, and that there remains due and unpaid upon said mortgage the sum of $500, with interest thereon, which sum is the amount of the interest of the undersigned in the property described in said mortgage by virtue thereof and of the assignments thereof." In such a case, while the pledgee is doubtless entitled to obtain possession of the chattels for the sake of realizing upon the pledge, it is not entitled to retain as pledgee more than sufficient to cover the sum for which the pledged mortgage was given to the original mortgagee. The judgment appealed from awards to plaintiff, in case the chattels are not delivered to it, a money judgment for what was found to be the value of the chattels, which much exceeds the sum for which the mortgage was given as security. Obviously this is too large. The money judgment in default of a delivery of the chattels should not exceed the amount due under the mortgage which was assigned to plaintiff. ( Allen v. Judson, 71 N.Y. 77; Davis v. Bliss, 187 id. 77.) It is quite clear from the evidence in the case that defendant is indebted to plaintiff; that the mortgage given to Grace Cleary and the money due thereunder were pledged to plaintiff as security for defendant's indebtedness, and that the chattels covered by the mortgage are of a value greater than the amount intended to be secured thereby.
In our opinion exact justice will be done if the alternative money judgment be reduced to the amount for which the mortgage was given with interest. Defendant urges upon this appeal certain technical objections to the admission in evidence of some of the documentary proof. The record shows that the precise objection now urged was not brought to the attention of the trial justice. If it had been, the defect in proof could have been easily met. It is too late to raise such an objection for the first time on appeal. The determination of the Appellate Term and the judgment and order appealed from will, therefore, be reversed and a new trial granted, with costs to appellant to abide the event, unless plaintiff shall stipulate to modify the judgment by reducing the amount which plaintiff is to recover from defendant in case the possession of the mortgaged chattels is not returned to plaintiff to the sum of $500 with interest from March 5, 1915, in which case the judgment as so modified will be affirmed, without costs to either party in this court or at the Appellate Term.
CLARKE, P.J., DOWLING, SMITH and DAVIS, JJ., concurred.
Determination and judgment and order reversed and new trial ordered, with costs to appellant to abide event, unless plaintiff stipulates to reduce judgment as stated in opinion; in which event, judgment as so modified and order affirmed, without costs. Order to be settled on notice.