Opinion
July, 1900.
Seward, Guthrie Steele for plaintiff.
William D. Leonard for defendant.
The lien of the railroad company mortgage attached to these after-acquired chattels (Platt v. N.Y. S.B.R. Co., 17 Misc. Rep. 22; 9 A.D. 87), but of course only to the extent of the rights the mortgagor acquired therein (United States v. New Orleans, 12 Wall. 362; Fosdick v. Schall, 99 U.S. 235; Meyer v. Car Co., 102 U.S. 1). The only right of the said mortgagor in the said chattels was to complete the conditional purchase it had made of them by paying for them in the installments agreed upon, and to have possession of them meanwhile. Until then this plaintiff, the seller thereof to the said mortgagor, retained the title to them. The foreclosure sale could convey only the rights in the said chattels which the mortgagor and mortgagee could unitedly convey (Code Civ. Pro., § 1632; The Rector, c.v. Mack, 93 N.Y. 488). They could not convey a complete title thereto; no more could the foreclosure sale (Ballard v. Burgett, 40 N.Y. 314; Austin v. Dye, 46 N.Y. 500). It follows that this defendant did not through the foreclosure sale get title to the said chattels as against this plaintiff (from whom the title thereto had never passed to the said mortgagor), unless by operation of section 111 or section 112 of the Lien Law (chapter 418 of the Laws of 1897; i.e. chapter 49 of General Laws). The former section provides that a contract that the title to "any railroad equipment or rolling stock" sold to a railroad company shall remain in the vendor until the purchase price is paid "shall be invalid as to any subsequent creditor of or purchaser from such vendee * * * for a valuable consideration and without notice", unless such contract is in writing, and acknowledged and recorded as though a real estate mortgage, in the county in which is located the place of business or principal office of the vendee. This requirement that the contract be acknowledged and recorded was not complied with. The mortgagee, it is true, was not a "subsequent" creditor or purchaser; on the contrary, the mortgage was given by the vendee prior to its conditional purchase of the chattels. But the purchasers at the foreclosure sale (who assigned their bid to this defendant) were "subsequent" purchasers. If the said mortgagor (the conditional vendee) had sold and delivered the said chattels to a purchaser for value and without notice, or if the mortgagor and mortgagee had unitedly done so, such purchaser would have got a perfect title by operation of this statute. It follows that the purchasers at the foreclosure sale got such a title. If the said chattels are not embraced in the said section 111 (i.e. in the words "railroad equipment and rolling stock"), but within section 112 (which is general), the result is the same. The failure to file the agreement as there required makes good the title of "subsequent purchasers, pledgees or mortgagees in good faith." That the holders of the bonds purchased at the foreclosure sale does not make a different case. A bondholder, or any creditor of the mortgagor, was on the same footing as a purchaser at such sale as any other third person without notice of this plaintiff's ownership of the chattels. The fact of his being such bondholder or creditor could not impute such notice to him as a purchaser at the foreclosure sale any more than if he had purchased of the mortgagor, or of the mortgagor and mortgagee united, without a foreclosure.
Judgment for the defendant.