118 N.J. Eq. 368 | N.J. Ct. of Ch. | 1935
This proceeding seeks the determination of the rights of the various petitioners to certain funds in the hands of the receiver for the defendant corporation, representing the proceeds of the sale by the receiver of two certain automobiles, one a Plymouth and the other a Chrysler. The facts, which are stipulated, vary as to the two cars and for that reason each set of facts will be discussed separately.
On May 10th, 1932, Finance Corporation of America loaned the sum of $576.60 to the dealer for the purpose of enabling the latter to purchase the automobile in question. To secure this loan the dealer, on the same day, executed and delivered a chattel mortgage covering this particular car. The mortgage was recorded on May 25th, 1932. Thereafter the Finance Company assigned its chattel mortgage to the petitioner General Credit Corporation.
On May 23d 1932, this court appointed a receiver for the dealer. Pursuant to an order of this court made on July 12th, 1932, the receiver sold all the assets of the dealer, including the Plymouth automobile, free and clear of all liens.
The proceeds of the sale of the Plymouth automobile are now claimed by the receiver; by DeCozen Motor Company, which asserts that title to the car never passed from it to the dealer; by General Credit Corporation, by virtue of the chattel mortgage given to Finance Corporation of America; and by the landlord under its distraint.
It may first be settled that the transaction between DeCozen Motor Company and the dealer was a cash sale. General Credit Corporation contends that in accepting the dealer's check the seller extended credit to the buyer at least for the period between the time when the check was accepted and the time it was presented for payment. To that contention there is no merit, for the generally accepted rule is that the acceptance of a check "does not imply an extension of credit, or preclude the exercise of the right of reclamation in the *371
case of its non-payment upon timely presentation." Peoples StateBank of Michigan Valley v. Brown,
The transaction between the seller and the dealer being a sale of a specific chattel, the question as to when title passed is to be determined by the intention of the parties as manifested by their conduct and all the attendant circumstances. That no conditional sales agreement was entered into, that no other security for deferred payment was taken and that the dealer gave to the seller a check for the full amount of the purchase price at the same time the car was delivered all indicate beyond question that the transaction was intended by the parties to be a sale for cash. A sale for cash is a conditional sale and as between the parties no title vests thereunder by delivery without payment unless the delivery be made under such circumstances as to evince a waiver of the condition. Hirsch v. LeatherbeeLumber Co.,
Under such circumstances, if the check is presented for payment promptly and is not paid, the rights of third parties not intervening, the vendor, acting with due diligence, may retake the goods for title has never passed from him. Hirsch v.Leatherbee Lumber Co., supra; Leatherbury v. Connor, supra;Frech v. Lewis,
It being determined that the dealer never obtained title, it is unnecessary to pass upon the validity of the chattel mortgage, which is questioned by the receiver and by the landlord. Nor is it necessary to treat of the landlord's claim other than to say that the Distress act does not authorize the landlord to distrain on chattels in the tenant's possession belonging to strangers. 1Comp. Stat. p. 1940.
The proceeds of the sale of the Plymouth automobile will accordingly be awarded to the petitioner, DeCozen Motor Company.
On March 16th, 1932, the dealer executed and delivered to Finance Corporation of America, a chattel mortgage covering the Chrysler. This chattel mortgage was filed March *373 23d 1932, in the Monmouth county clerk's office in book 14 of conditional sales agreements. It was not then nor has it since been recorded as a chattel mortgage. This instrument was also assigned to General Credit Corporation. the assignment being unrecorded.
The validity of the chattel mortgage is attacked on several grounds of which it is necessary to discuss only one, namely, that it was not recorded forthwith in accordance with the requirement of the Chattel Mortgage act. 1 Comp. Stat. p. 463.
It appears that the instrument was not delivered to the Monmouth county clerk's office until seven days after the date of its execution. This lapse of time is not a compliance with the statute and the mortgage is therefore void as to creditors.Hardcastle v. Stiles McClay,
As between the receiver and the landlord, the latter is entitled to a preference. The distress levied by the landlord, on May 18th, 1932, was prior to the appointment of the receiver in this cause, which took place on May 23d 1932. An order of the court of chancery appointing a receiver and directing him to take possession of the goods and chattels of an insolvent corporate tenant falls within the limits of section 4 of the Landlord and Tenant act (3 Comp. Stat. p. 3066), which provides that no goods or chattels on the leased premises shall be liable to be taken by virtue of execution, attachment or other process unless prior to such removal all rent due for the premises at the time of taking, not to exceed one year's rent, is paid. Wood v.McCardell,
I will advise a decree in accordance with these conclusions. *374