56 N.J. Eq. 674 | New York Court of Chancery | 1898
This chattel mortgage is criticised on several grounds. The affidavit of the mortgagee is declared to be a sufficient statement of the consideration, and it is insisted that the chattel mortgage is void because not recorded in the clerk’s office of the county in which the mortgagor resided, and the sale by the chattel mortgagee under the chattel mortgage is alleged to have been made before the chattel mortgage came to be due.
The mortgage upon the goods and chattels being a nullity as to the complainant, the sale of those goods and chattels which was attempted to be made by the mortgagee, under this authority,
The complainant is entitled to an injunction to restrain the disposition and removal of the goods and chattels by the defendants under the authority of this void chattel mortgage and the sale made thereunder.
The mortgage as to its effect upon the moneys due and to become due on the contract made by the mortgagor with the Seaside Park Company, stands in a different position.
This item is a chose in action, and is not within the operation of the Chattel Mortgage act. That statute applies only to mortgages upon goods and chattels, and by its terms refers to such goods and chattels as are capable of delivery and of actual and continued possession. The object of the act is to make invalid, as against the creditors of the mortgagor, all mortgages on goods and chattels, unless possession be taken of them, or the mortgage be recorded as provided by the act. The old doctrine assumed that the possessor of personal property was the owner of it and that secret gifts or charges on that property made while he continued to use it as his own, were frauds upon creditors who dealt with him. Twyne’s Case, 3 Colee 80. But the property which was so treated was of such a visible and tangible character that the possession of it was manifest to creditors, who might by reason thereof give credit to the possessor, and be injured by the subsequent assertion of the secret title. Runyon v. Groshon, 1 Beas. 86 (1858), contains an instructive collation of the cases showing the advance to the doctrine now accepted, that the continued possession of the chattels by the vendor or mortgagor, though prima fade indicative of fraud, may yet be explained away by proof by the vendee or mortgagee that the transaction was in good faith and without fraud. Miller v. Shreve & Pancoast, 5 Dutch. 250 (1861), confirmed this view, and in 1864 the first statute was passed compelling the filing and
These evils, however, do not arise, neither do the corrective statutes, either in terms or spirit, apply when the mortgage in question disposes of that sort of property which is not of a physical character and of which there is no apparent possession which could tempt parties to deal with the possessor as with one having values which could be relied upon to pay the debts thus incurred. A Massachusetts statute required “ mortgages of personal property” to be recorded, which language is somewhat wider than that used in an act which named only mortgages on “ goods and chattels.” In Marsh v. Woodbury, 1 Metc. 436, this act was held to apply only to goods capable of delivery, and not to a conditional assignment of a chose in action, and that it was not necessary that such an assignment should be recorded. This case was cited with approval as to this principle, in Williamson v. New Jersey Southern Railway Co., 11 C. E. Gr. 403, where it was held that the act concerning chattel mortgages did not extend to a mortgage of the capital stock of a corporation. In Bacon v. Bonham, 12 C. E. Gr. 209, there was an assignment of a legacy expectant, as security for the repayment of a loan. A judgment creditor filed his bill to compel discovery and application of the assets to the payment of his claim. It was held that in equity it was a good transfer as security for the loan, and not within the operation of the act concerning chattel mortgages, which did not apply to mortgages of choses in action. The decree was affirmed on appeal, though no allusion was made in the opinion to the operation of the Chattel Mortgage act. Bacon v. Bonham, 6 Stew. Eq. 614. I think the principles laid down in this case, both as to the scope of equitable assignments and
Bonds and mortgages have been held in this state to be goods and chattels within the operation of section 6 of the statute of frauds (Greenwood v. Law, 26 Vr. 168), and it has been decided that trover will lie for their recovery as goods and chattels, under the act authorizing suit against the executor of a testator who, in his lifetime, had converted goods or chattels. Rev. L. p. 174 (1820); Elm. Dig. p. 165 § 5; Terhune v. Executors of Bray, 1 Harr. 54. Chief-Justice Horn blower declared that bonds and other documentary securities must in law be decreed to be goods and' chattels. I do not consider that these rulings should aifect the views I have expressed, as the contract with the Seaside Park Company, now under consideration, was in no sense a security, being simply an executory agreement for compensation for labor and material, and entirely distinct from that class of personalty, the mortgaging of which led to the passage of the Chattel Mortgage acts.
There is neither allegation nor proof of fraud in the transaction between the defendant Nelson, the mortgagor, and the defendant Morgan, the defendant mortgagee. The evidence all goes to show good faith, and a transfer of the benefits of Nelson’s contract with the Seaside Park Company, as a security for moneys which Morgan had loaned him. This took place on September 2d, 1894, several weeks before the judgment creditor had entered his judgment, and necessarily before any proceedings for discovery, &c., had been instituted. The title of a receiver, such as the complainant, as to the ehoses in action of the defendant in the judgment, has been defined in Coleman v. Roff, 16 Vr. 11, to relate to the time of the issuing of execution. This was on September 20th, 1897. At this time the equitable assignment to the defendant Morgan to secure the payment of his debt was complete, and all that remained to the defendant Nelson was his equity in the benefits of the contract after the payment of his debt to Morgan.
What amount is collectible on the contract does not appear, but the defendant in the judgment (Nelson) being entitled to
I will advise the issuing of an injunction restraining the lefendant Nelson in the manner indicated by the views above expressed.