Smith v. Reeves , 33 How. Pr. 183 ( 1866 )

Mullin, J.

The complaint is in trover, for certain articles of personal property unlawfully taken and converted by . defendant to Ms own use.

The defendant in Ms fourth defense, alleges that the plaintiff on the 12th December, 1865,’ to secure a debt due from Mm to Gibbs & Steel, executed and- delivered to them his promissory note for the sum of $99.82, and as collatteral security gave them a chattel mortgage on the property mentioned in the complaint, which mortgage and note were afterwards assigned to the defendant. The mortgage was duly filed, to make it a valid lien on the said property. That plaintiff has not paid said note or any part of it, although the whole amount is now due and payable. The defendant alleges in his answer, that he had purchased the property of plaintiff, upon the representation by plaintiff that it was unincumbered, whereas it was incumbered by virtue of the mortgage in question. Why this allegation is made in this answer, I am unable to comprehend, as it has no manner of connection with the mortgage, unless it was done to show why the defendant acquired the mortgage. If defendant had purchased the property of plaintiff, that of itself would seem to be a sufficient defense. But it was not alleged in that view. The question then is, whether the fact that the defendant was the owner of a mortgage which was a valid lien on the property in question, is a defense to this action, either as a bar or by way of mitigation of damages.

The mortgage was given in December, 1865. This conversion is alleged in the complaint to have occurred the last of March, 1866. The defendant acquired title to the mortgage in April, 1866, and after'the conversion of the property. ... ’

If at the time of the alleged conversion, the last of March, the debt for which the mortgage was given to secure, had become due, the plaintiff could not maintain the action. The legal title in 'that event would have been in Gibbs & Steele. But the plaintiff being in possession, might maintain an action by reason of his possession merely, against a wrong-doer, and could in that action recover the value of the property. But the defendant does not show when the debt became due, except that he avers that it is noto (that is, at the 'time of putting in the answer) due. That is not equivalent to an averment that it was due on any day prior to that time. As it does not appear that the money was due at the the time of the conversion, by the express terms of the mortgage, it remains to inquire whether it becomes forfeited by reason of the other conditions, to wit: that if the mortgagees deemed themselves insecure, they might take possession, sell, &c. Whatever the parties’ rights might be under this branch of the condition, it is not averred that either the mortgagees, or the defendant as-assignee, entered and took the property by virtue of it, so that the defendant is not entitled to any benefit under it as a bar to this action.

The question then comes to this : can a tort-feasor after the commission of the wrong, protect himself against the "claim of the injured party, for damages sustained by reason of such wrong, by purchasing the property from the true owner, or acquiring a valid lien thereon ? The conversion is the gist of the action, and most clearly there is no method by which the defendant, by an act of his own, can defeat the right of action. The plaintiff must be entitled, in any contingency, to the damage he has actually sustained. Can the defendant acquire hens upon, or title to the property, and set -up such title or hen in reduction of damages P

By the fourth defense in the answer, it appears that when it was put in, the defendant actually owned the property in question, subject to the plaintiff’s equity of redemption. If the plaintiff recovers of defendant, he must immediately pay over to the defendant the amount due on the mortgage, or he may sue for and recover it, as money had and received to his use. It cannot be necessary to resort to this circuitous method of obtaining redress. The plaintiff is entitled to recover the value of ah the property, less the amount due on the mortgage. The fourth defense must, be treated, therefore, as a defense in mitigation of damages.

The plaintiff’s counsel has referred me to several cases in support of the proposition that a wrong-doer, who mala fide acquires a lien upon property, cannot assert it by way of defense against the party injured, in an action for the wrong. The first of these cases is Taylor agt. Robinson (8 Taunt. 648). In that case the defendants were brokers, and purchased property of Duncan & Co., for one McMichael, which was to remain on D. & Co.’s premises free of charge .for one month, and if it remained longer then McM. was to pay for the use of the premises. Part of the property was shipped to McM. by his direction, and after that, proceedings in bankruptcy were instituted against McM. Subsequent thereto, the defendants took possession of the residue of the property, and removed it to their own premises, and thereafter claimed to hold it by virtue of a hen thereon for their commissions as factors. The question was, whether the defendants had such a possession as entitled them to a hen, and it was held that they had not. They never had possession, except such as they acquired by the wrongful taking, and the court held, that a hen cannot be obtained by wrong.

Madden agt. Kempster (1 Comp. 12), is another application of the same principle. There the defendant had been agent for one Hart, who was an officer in the marines, and with whom Hart had kept an account. For some reason Hart transferred his account to the plaintiff, and after such, transfer the defendant went to the plaintiff’s agent in London, and represented that Hart was owing him a balance of ¿660, and the agent gave defendant a check for the amount on plaintiff’s bankers, which was paid. It was not true that Hart owed defendant any such balance. When the plaintiff demanded the money thus wrongfully obtained, defendant claimed to hold the money on the ground that defendant had accepted a bill drawn by Hart, and that he had the right to be indemnified against such acceptance. The court held, that having obtained the money by fraud, he could not, therefore, set up a lien to which he might otherwise have been entitled. '

Lempriere et al. agt Paseley (2 Term, 485), is to the same effect. In that case the defendant loaned one Syedes money, and to secure it took an assignment of fifty tons of brazeletto wood about to be shipped to Syedes, and an agreement to transfer to defendant the bills of lading when received, as further security. The wood was shipped, and bills of lading sent to 8-, who became bankrupt, and afterwards transferred the bill of lading to defendant, and on the arrival of the vessel defendant obtained possession of the property from the captain, on payment of freight and charges,; and plaintiffs, as assignees of Syedes in bankruptcy, brought this action to recover the wood, without tender of the freight, <fec. The plaintiffs had a verdict. An order to show cause why it should not be set aside and a new trial granted, and the court set aside the verdict and granted a new trial. It was held that the assignment of the wood and agreement to transfer the bill of -lading, operated as an equitable assignment, and was, therefore, operative against the assignees in bankruptcy. Ashtjest, J., says in delivering the opinion of the court, that if defendant is to be considered as a wrongdoer, the plaintiffs would have no occasion to tender him an indemnification for expenses incurred by him in order to obtain a wrongful possession. But as it was held that the defendant acquired possession rightfully,- he was entitled to hold until the debt, for the security of which the property was transferred, was paid.

None of these cases touch the case before me. Although the defendant acquired the possession tortiously, yet by the purchase of the mortgage he acquired a hen upon the property in question; and at the time of answering, he had become legal owner of the mortgaged property. All that was left in the plaintiff was a mere equity of redemption. It is not the case of illegally acquiring title to property by means of the discharge of a hen thereon in favor of the person who had possession, but it is the case of a wrong-doer acquiring title after the tortious act to the property converted or injured.

Suppose A. to have hired the horse of B. for a month, and during the month 0. unlawfully takes the horse from A., and converts it to his own use. A. may maintain an action for •hhis conversion, and would be entitled to recover the value of the horse as damages. But suppose before answer 0. purchases the horse of 33.., and thereby becomes owner. Could A. recover the full value of the horse ? It seems to me he could not. When A. recovers the damages actually sustained by him by reason of the conversion, it is all that he is entitled to. But if A. has a lien upon a horse for his keep, or for any other lawful cause, and B. goes to A., and without right takes the horse, paying the Hen, he is not at Hberty to protect his wrongful possession through the Hen. He paid the money in his own wrong, for the very purpose of enabling him to prefect the wrong, and the law will not aid him in enforcing it.

But in the case supposed, it is competent for one having the Hen to transfer the horse subject to the Hen, and the person receiving it way enforce it, and the owner cannot get his horse until the Hen is discharged. In the one case there is no conversion, in the other there is. In the one case the receiver takes a transfer of the Hen, in the other he takes" the animal regardless of the rights of the owner, and pays the Hen only because he could not perfect the wrong without it.

There is no rule of law that I know, which prevents one who has unlawfully taken personal property, from purchasijjg subsequently a mortgage or other Hen upon, or even buying the property itself. Such a purchase does not impair the rights of the injured party, while leaving unrestricted the right to purchase and seH aU kinds of property which is by law the subject of purchase and sale. For these reasons, I think the fourth defense is a valid one in mitigation of damages.

In the fifth defense the defendant aHeges the recovery of a judgment against the plaintiff by one Samuel Alverson, for $868.97, which was assigned to Anson B. Moore, and after-wards, and in February, 1866, a levy was made on the property in question in this suit, by a deputy of the sheriff, subject to the mortgage mentioned in the fourth defense, and afterwards, and before the commencement of this suit, the said judgment and levy were assigned to the defendant, and the plaintiff is insolvent, and has no other property out of which said debt can be coHected.

Assuming, as we must, these facts to be true, it follows that the property at the time of the conversion (the 30th March), was in the custody of the. law, and the defendant in that execution (the plaintiff in this action), had no present right of possession, which entitles him to maintain this action. The defendant in an execution, with whom property is left after levy, is the mere servant or agent of the officer, and cannot sue for the conversion of, or injury to, the property seized. Rew agt. Barber (3 Cow. 272); Miller agt. Adsit (16 Wend. 335), and cases cited in opinion of Mason, Senator. This answer then is a bar to the plaintiff’s right of action.

I must, therefore, order judgment for the defendant on the demurrer, but with leave to the plaintiff to withdraw the demurrer to the fifth answer on payment of costs.