35 N.J. Eq. 68 | New York Court of Chancery | 1882
The complainant seeks to have the defendants restrained by injunction from causing to be sold certain chattels upon which she claims to hold a chattel mortgage, and which the defendants have procured to be seized under an execution. The chattels are owned by two sons of the complainant. They executed a mortgage to the complainant on the chattels in controversy, August 17th, 1880. The mortgage was filed on the day of its date in the proper office. It was not acknowledged, and could not therefore be recorded under the act of 1880. P. L. of 1880 p. 266. The defendants recovered a judgment against the mortgagors on the 7th of June, 1881, and procured an execution to be issued thereon, and a levy to be made on the mortgaged chattels on the 17th of June, 1881. The defendants admit that they intend to cause the chattels to be sold regardless of the complainant’s mortgage. They claim that the mortgage is void as to them. The ground of this claim is, that the consideration of the mort
The statute of 1878 (P. L. of 1878 p. 189) declares that every -chattel mortgage made after it shall take effect, which shall not be accompanied by an immediate delivery and followed by an .actual and continued change of possession of the things mortgaged, shall be absolutely void as against creditors, * * * unless the mortgage, or a true copy of it, having annexed thereto an affidavit, * * * stating the consideration of the mortgage, and, as near as possible, the amount due and to grow due thereon, be filed in the proper office. This statute prescribes the rule by which the validity of the complainant’s mortgage, as against the defendants, must be tried. An affidavit was annexed to and filed with the complainant’s mortgage, in which she ■declared “ that the true consideration of said mortgage is as follows, viz., the sum of fourteen hundred dollars, and the goods and -chattels in the foregoing schedule are given as collateral security for said amount.” The defendants insist that this affidavit •conforms neither to the letter nor the spirit of the statute, but •evades the test the legislature intended to prescribe by it.
The purpose of the legislature is clear. The statute was ■designed to prevent the use of chattel mortgages as a means of fraud. It was intended as a guard against dishonesty, and to •secure fairness and good faith in such transactions. To this end the mortgagee, his agent or attorney, is required to state, under oath, the consideration of the mortgage; that is, not simply to state the amount or sum for which the mortgage is given, but to •state how the debt on which it is founded arose; what was the cause of the debt, or how the relation of creditor and debtor was ■created between the parties. The legislature, I think, meant to compel the mortgagee to commit himself to a statement or dis•closure of his debt or claim, when he made his mortgage a matter of public record, sufficiently precise and explicit to afford the creditors of the mortgagor, in case fraud was suspected, a fair •opportunity to ascertain, by legal investigation or otherwise, whether the mortgage was an honest security or a mere fraudulent cover.
Simply affirming under oath that the consideration of a mortgages the sum for which it is given, without disclosing how the debt on which it is founded arose or was incurred — whether it
The direction of the statute is imperative. Unless an affidavit of the kind required by the statute is made part of the public record, the mortgage is declared to be absolutely void as against creditors. Such, I think, is the condition of the complainant’s mortgage in respect to the defendants, and, therefore, the application for an injunction must be denied.