Frank West, Executor, etc., Respondent v. George D. Crary, Appellant

Frank West, Executor, etc., Respondent v. George D. Crary, Appellant. Where a mortgagee of personal property, after forfeiture, receives payment of his debt, it is a waiver of the forfeiture, and his title to the property is extinguished. A mortgagor has an equity of redemption even in case of forfeiture. (Submitted January 29, 1872; decided February 6, 1872.) Appeal from judgment of the General Term of the Supreme Court in the first judicial department, affirming a judgment in favor of plaintiff, entered upon the report of a referee. The action was brought by plaintiff’s testatrix, Mary Hegeman, to recover the value .of one-quarter of a schooner called the “G. L.,” and the earnings of said one-quarter from Januuary, 1858, to January, 1863. First. In the winter of 1858, the defendant loaned to West & Walker (a firm composed of Francis West and Alvin Walker) the sum of $1,811. Second. About the time the loan was made, and on the 16th day of February, 1858, the plaintiffs testatrix (then Mary West) executed and delivered to the defendant a bill of the said one-quarter of said vessel. Third. This bill of sale, though absolute in terms, was intended and delivered simply as secv/rity for the payment of the said loan. Fourth The defendant, upon receipt of the bill of sale, took possession of the property, collected and appropriated its dividends or earnings until January, 1863, when he sold it without notice to the plaintiff’s testatrix for $1,150. Fifth It appeared, as found by the referee, that the defendant received from the said one-quarter of said vessel (value and dividends) $2,362.68. He also received various sums of money from and on account of West & Walker, and became chargeable with certain freights upon their vessels, and amounting in the aggregate to $2,902.55. The balance remaining in defendant’s hands, after full payment of all moneys due from West & Walker, was $1,181.56, for which sum, and interest, the referee directed judgment. A. A. Redfield for appellant. (Points not received by Reporter.) J. D. Hill for respondent. The delivery of the property was a pledge. (Cortelyou v. Lansing, Cairne’s Cases, 204; Stearns v. Marsh, 4 Den., 227; Wilson v. Little, 2 Comst., 443.) Upon payment, it was defendant’s duty to return property and its earnings. (2 Parsons on Contracts, 5th ed., 111; 3 Parsons on Contracts, 3d ed., 274.) He was bound to return property to the one from whom he received italthough pledged to secure a debt of a third person. (Hasbrook v. Vandewort, 4 Sand., 72, 78; Story on Bailment, § 300; Sinclair v. Jackson, 8 Cowen, 586; Torrey v. Bank of Orleans, 9 Paige, 649, 658.) Defendants should have notified plaintiff’s testatrix of time and place of sale. (Wilson v. Little, 2 Comst., 449; Wheeler v. Newbould, 16 N. Y., 392; Dykers v. Allen, 7 Hill, 497.) [MAJORITY — Church, Ch. J.] Church, Ch. J. The transfer of the interest of Mary Hegeman in the schooner, for the purpose of securing the loan hy defendant to West & Walker, more nearly resembled in legal effect a pledge than a mortgage. (4 Den., 227.) Although the transfer was absolute, it was competent to prove it was intended as a security. (2 Comst., 443.) The referee has found that the transfer was intended to operate as a mortgage. If this finding is to be construed literally, and the transaction was a mortgage, then it is urged that, upon forfeiture, the title vested absolutely in the defendant, and an action at law would not lie for the conversion. This proposition is correct, but is not available in this case for the reason that after the alleged forfeiture the defendant received payment for his debt, as the referee has substantially found. This was a waiver of the forfeiture, and the defendant’s title was extinguished. (3 Den., 33.) But a forfeiture can scarcely be claimed. Ho time of payment was fixed, and' when the defendant demanded payment an arrangement was made by which the defendant was to take possession of, and sell certain property of West & Walker and apply it upon the debt, from which business and the dividends received from the schooner the defendant received the whole amount of his demand against them. This is the result of the findings; and, taking them as true, there was no forfeiture by a failure to pay, and at the time he sold the schooner he had no claim upon it. Even in case of forfeiture, the mortgagor has an equity of redemption; and this action was tried as an action for an accounting between West & Walker and the defendant, and if any injustice was done the defendant it was in adjusting those accounts; but it involved questions of fact only, which this court cannot review. It is proper, however, to say, after a careful examination of all the evidence, that if the referee committed any error in this respect it is not apparent. The result of the findings is, that, at the time of the sale of the schooner, West & Walker owed nothing to the defendant. The plaintiff’s testatrix owned the interest in the vessel, it having been borrowed for the purpose of being turned out to defendant as security, and the defendant having sold it she brought the action and recovered what he received for it. The lapse of time did not bar a recovery, and its significance in other respects was for the consideration of the referee. The judgment must be affirmed. All concur. Judgment affirmed.