66 N.J. Eq. 305 | N.J. | 1904
The opinion of the court was delivered by
The bill in this case was filed to foreclose a mortgage executed by the Penn Corclage Company to the appellant, the Knickerbocker Trust Company, on the 1st day of February, 1896, to secure the payment of an issue of bonds aggregating $100,000. This mortgage covered certain lands and premises belonging to the cordage company, situate in Burlington countjg with the improvements' thereon, the franchises of the company, and all the goods and chattels belonging to it and being in use about the said lands and premises. At the time of its- execution a prior mortgage, covering the same property, held by one Adolph Segal, and which had been recorded in the clerk’s office of Burlington county, both as a real estate mortgage and as a chattel mortgage,
The Penn Cordage Company became insolvent in 1897, and a receiver was appointed on December 6th of that .year. The bill of complaint was filed in February, 1900.
The property embraced in the appellant’s mortgage is the cordage works of the Penn Cordage Company, comprising numerous buildings, including a rope walk, together with the machinery, tools and appliances used therein. The contest is between the appellant, as mortgagee, and the receiver of the cordage company, representing judgment and other creditors. Two questions are presented — first, whether certain of the machinery and appliances contained in the company’s buildings and used in the manufacture of its product are fixtures, and, consequently, a part of the realty; and, if they are not fixtures, then, second, whether the appellant’s mortgage became recorded as a chattel mortgage, within the meaning of the Chattel Mortgage act, by being lodged with the county clerk for that purpose, although it was subsequently returned to the mortgagee without being in fact so recorded.
The learned vice-chancellor before whom the case was tried held that the machinery and appliances which are the subject-matter of this controversy were not fixtures. Pie further held that the mortgage had not been recorded as a chattel mortgage, and was therefore void as against creditors, so far as the chattels covered by it were concerned. The soundness of each of these conclusions is challenged by the appellant.
In the earlier cases, decided not only in the supreme court and the court of chancery, but also in this court, in determining whether such intention existed with respect to a given machine, the conclusion seems to have been rested very largely upon the method adopted in making the annexation, and but little consideration given to the relation which the machine bore to the
The rule laid down in Feder v. Van Winkle, and followed in Temple Company v. Penn Mutual Life Insurance Co., states the true principle to be applied in the determination of the question when it is presented. Whenever chattels have been placed in, and annexed to, a building by their owner as a part of the means by which to carry out the purposes for which the building was erected, or to which it has been adapted, and with the intention of permanently increasing its value for the use to which it is devoted, they become, as between the owner and his mortgagee, fixtures and as much a part of the realty as the building itself. And this is true notwithstanding that such chattels may be severed from, and taken out of, the building.in which they are located without doing any injury either to them or to it and advantageously used elsewhere, and notwithstanding that the building itself may thereafter readily be devoted to
Tested by this principle, the machinery and appliances which are the subject-matter of this controversy, with the exception of the po-rgy jenny, .the platform scale, the windlasses and the reel flyers (which are none of them annexed to the buildings in which they are located), are fixtures and subject to the lien of the appellant’s mortgage as part of the real estate embraced therein.
As the excepted articles are not a part of the realty, it is necessary to consider and determine the second question decided by the vice-chancellor, namely, whether the appellant’s mortgage is valid as a chattel mortgage against the creditors of the mortgagor, notwithstanding the fact that it was recorded only among- t-he records of real estate mortgages- and not in the book provided for the recording of chattel mortgages.
The provisions of our Chattel Mortgage act bearing upon this question are contained in sections 4, 5, 7 and 9. Gen. Stat. p. 2118. Section 4 provides as follows:
“That every mortgage or conveyance intended to operate as a mortgage of goods and chattels hereafter made, 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 the creditors of the mortgagor, and as against the subsequent purchasers and mortgagees in good faith, unless the mortgage * * * be recorded as- directed in the succeeding section of this act; provided, that nothing contained in this act shall be taken, construed or held to apply to any mortgage of personal property included in a mortgage of franchises and real estate heretofore or hereafter made by any railroad company, and which hath been or shall be recorded or registered as a mortgage of real estate in every county in which such railroad, or any part of it, is or shall be located, and it shall not be necessary to record as a chattel mortgage any such mortgage as is in this proviso- described.”
Section 5 requires the instruments mentioned in the preceding section to be recorded in the office of the register (or in the office of the cleric where there is no register) of the county where the mortgagor resides, if he is a resident of the state at the time of its execution; and if not, then in the office of the register (or clerk) of the county in which the mortgaged
“That the clerks and registers of the several counties of this state are hereby authorized to provide suitable books, at the expense of their respective counties, in which to record the instruments by this act directed to be recorded; and it shall be the duty of the said clerks and registers to record such instruments in accordance with the provisions of this act; and the said clerks and registers shall respectively enter, at the foot of the record of each mortgage and instrument so recorded, the time when such mortgage or instrument was received by- him in his office to be recorded, and shall endorse on each mortgage and instrument, when recorded as aforesaid, the time when the same was delivered to him at his office to be recorded, and the book and page in which the same has been recorded.”
Section 9 provides:
“that every chattel mortgage hereafter recorded pursuant to the provisions of this act shall be valid as against the creditors of the mortgagor, and against subsequent purchasers and mortgagees-, from the time of the recording thereof until the same be canceled of record.”
The contention first advanced on behalf of the appellant is that the recording of its mortgage among the records of real estate mortgages was a sufficient compliance with the provisions of the- Chattel Mortgage act. It is not necessary to repeat the argument made in support of this contention. It is enough to say that the proviso, contained in section 4 of the act, makes it plain that, with' the exception of the class of mortgages designated therein, ■ every mortgage which covers both real and personal property must, in order to make it a valid lien upon both classes of property as against creditors, be recorded not only among the records of real estate mortgages, but also in one of the books which the statute under consideration requires to be provided for the recording of chattel mortgages.
The solution of the question must depend upon whether the lodging of the appellant’s mortgage for record as a mortgage of chattels (for this we consider to have been the effect of the letter of instructions sent by the appellant to the clerk with
We do not, however, concur in the view, which seems to have been held by the vice-chancellor, that, by force of the provision of section 9 of the act, a chattel mortgage is void as against creditors until it is actually transcribed in the records. The seventh section of the act requires the clerk to enter, at the foot of the record, the time when the mortgage was received by him for record, and also to endorse that time on the instrument itself. Manifestly the purpose of this requirement was to advise persons who should inspect either the record or the mortgage itself of the time when the instrument was lodged for record, and no reason can be perceived for affording this information, unless it was intended that the recoi'd, when made, should relate back to that time; in other'words, that the deposit of the instrument for record, and its transcription in the record, should be presumed to have occurred at one and the same time. It follows, therefore, that, as soon as a chattel mortgage is deposited for record in the clerk’s office, it must be presumed to have been forthwith transcribed in the records; and that presumption continues so long as it remains in the office and until it is actually transcribed; and when that is done the presumption becomes conclusive. When, however, the mort
The decree appealed from should be reversed, except so far as it adjudges that the porgy jenny, the platform scale, the windlasses and the reel flyers are chattels and therefore free from lien of the appellant’s mortgage.
For reversal — The Chiee-Jtjstice, Dixon, Garrison, Fort, Garretson, Pitney, Swayze, Bogert, Yredenburgit, Yroom, Green, Gray — 12.
For affirmance — None.