Hulsen v. Walter , 34 How. Pr. 385 ( 1867 )

Vast Vorst, J.

A mortgagee of chattels has the legal title to the property covered by the mortgage, liable to be defeated by redemption. The title of the mortgagee becomes absolute on the failure of the mortgagor to discharge the conditions of the mortgage. (Burdick agt. McVanner, 2 Denio, 170; Fuller agt. Acker, 1 Hill, 475; Dane agt. Mallory, 16 Barb. 49, 50.)

After the condition is forfeited, all the cases agree that the interest of the mortgagee in the chattel can be levied on and sold as his property. If taken out of the morgagee’s possession, he can maintain successfully a suit for its re-dehvery to him as his absolute propérty. After such forfeiture, the only right which remains in the mortgagor is an equitable right of redemption. All legal claim of the mortgagor is gone after forfeiture. He could not sue for the property, nor sell it, or give another valid mortgage upon it. A person can neither sell or mortgage—and a chattel mortgage is a sale—a thing to which he has no title. Nor, after forfeiture, is the mortgagee bound, at law, to receive the amount of the mortgage debt, and restore the property to the mortgagor. The party has left to him only his equitable remedy by bill to redeem. (Charter agt. Stevens, 3 Denio, 33.)

The mortgage from the defendant Byer to Zeckiel, and which was subsequently assigned to Walter, was payable on demand. The mortgagee did not reduce the property into his actual possession, but he did demand payment, which was refused. After that the legal title became absolute in the mortgagee. He had a perfect right to take the property at once into his possession, and sell and dispose of it as his own, and he could not be interfered with in that right by the mortgagor himself, nor by any person claiming under him. The property was not subject to be charged by any subsequent sale, mortgage or incumbrance which the mortgagor might seek to make of or impose upon it.

The referee has reported as facts in this case, that the mortgage from Byer to Zeckiel was due and owing before either of the last two mortgages were executed, and that no part of the moneys seemed thereby had been, paid, and that the amount due thereon had been demanded of the mortgagor, by the mortgagee, before the mortgages to Gordon and Herman were executed; and that when Gordon and Herman took their mortgages they respectively knew of the existence of the Zeckiel mortgage, and that it was due and owing. Under such a state of facts, the mortgages to Gordon and Herman conveyed no title in the property to them. Byer, at the time he executed these mortgages, had no legal title to convey, and could transfer no interest in the property to them. Christaller was the assignee of the Gordon and Herman mortgages; as such assignee, he could take no greater right or interest than his assignors had. If the mortgages were not a valid lien when they were made, they could not ripen into a good security in his hands.

The proceedings on the part of Christaller to foreclose the mortgages, and the purchase made by him on the sales under said mortgages gave him no title, and he could not convey any to the plaintiffs, and the plaintiffs claiming through Christaller under the facts reported by the referee, have no right in equity to redeem. Besides the equity of redemption remaining in Byer, the mortgagor, was completely cut off by the foreclosure of'the first mortgage by Walter, the assignee. Walter was not obliged to foreclose to perfect his legal title to the property; under the forfeiture he was already the absolute owner. But the proceeding had the effect to extinguish the outstanding equity of redemption. It was claimed by the counsel for the plaintiffs, on the argument of the motion, that the subsequent re-filing of the mortgage by Zeckiel the mortgagee, and his assignment of same to Walter, was a waiver of the forfeiture created by the demand and refusal to pay the mortgage, and inconsistent with the claim of absolute ownership in the chattels. I have given this point much consideration with a view to see if it could give the .plaintiffs relief. But I do not see how it can aid them. I do not think that they are* in a position, with regard to the subject matter, under the facts of this case, to claim relief from these acts. A person ignorant that a forfeiture had occurred and who had acted upon such re-filing as an acknowledgment on the part of the mortgagee, that his title had not become absolute, might make a claim on that ground. But it appears, as has heretofore been stated,, that the mortgages under which plaintiffs claim were executed long anterior to such re-filing, and that the mortgagees had knowledge of the facts which created the forfeiture at the time they took their mortgages, and in law must be presumed to have known that Byer had then no interest or title in the property to convey to them.

Motion to dissolve injunction granted.