17 N.J. Eq. 516 | N.J. | 1865
The opinion of the court was delivered by
The Chancellor made an order in this cause, declaring the New Jersey Arms and Ordnance Company to bo insolvent, and appointed a receiver, in pursuance of the statute entitled “An act to prevent frauds by incorporated companies,” (Nix. Dig. 371.) The property of the company, consisting of real and personal estate, and some of it liable to deterioration, was subject to two mortgages, the fairness and obligation of which were called in question by the complainant’s bill. It being the opinion of the receiver that he could only sell the property subject to the encumbrances, a petition was filed by the complainant, setting forth the proceedings on his original bill, and praying that the receiver may be ordered and decreed to sell and dispose of the said real and personal property, free and clear of the liens and encumbrances of the said two mortgages, and that the proceeds of said sale be paid into court, to await the decision of the matters before the court for adjudication, and abide the issue of the said suit of the petitioner. The Chancellor, being of opinion that such an order was not within the power of the court, and ought not to be made, decreed that the order applied for be refused and denied, without costs. From this decretal order the complainant has appealed, and the question which has been argued, and is now to be decided by this court, is whether the Chancellor has, by law, the power to make the order applied for.
It is manifest that the question turns on the construction of the statute, under which the proceedings were had. That statute confers upon the Chancellor the power to declare a corporation insolvent, and to appoint a receiver, who is to take possession of, and sell the property for the benefit of creditors. When a case is properly before him, he will, of course, proceed in all matters not regulated by the statute, according to the general principles of equity, applicable to
The seventh section. (Nix. Dig. 373,) gives power to the receiver to sue for, and collect debts, and to take and possess the goods and chattels, rights and credits, moneys and effects, lands and tenements, boobs, papers, choses in action, bills, notes, and property of every description, belonging to the said company at the time of the insolvency, and to sell, convey, or assign, all the said real and personal estate, and to pay into the Court of Chancery; all the moneys and securities for money arising from such sales, to be disposed of under the order of the court, among the creditors of the company. The fifteenth section directs, that in the payment of the creditors, they shall be paid proportionably to the amount of their respective debts, excepting mortgage and judgment creditors, when the judgment has not been by confession for the purpose of preferring creditors; It is argued for the appellant, that these two sections; and especially the direction respecting the payment of mortgage and judgment creditors in the sixteenth, confers a general power on the receiver, to sell and make the money to pay them, in such manner as he may deem advisable, and of course on the court, to direct him accordingly.
It is clear, and could not be denied on the argument, that
In the case of Bell v. Fleming’s ex'rs, 1 Beas. 490, it was held by this court, that an assignment does not impair a mortgage security, and that the mortgagee may interpose a claim for his debt, and also proceed on his mortgage- so as to maintain his lien; departing in this respect from the practice of the English courts in cases of bankruptcy, who hold that if the mortgagee proves his debt, he must deliver up his mortgage for the benefit of the creditor.
The only case that has sanctioned the order asked for by
Many cases may, no doubt, be imagined, where it would be greatly to the advantage of ^mortgage and judgment creditors, for the receiver to sell the property, clear of encumbrances; but if so, their consent can generally be obtained. Other creditors may often suffer by following the course marked out by our laws, and probably the case before us is one of that kind. However this may be, additional legislation is necessary before the law can be changed. The duty of the court is to apply the law as it exists, and not to attempt the introduction of new provisions, however desirable they may seem. The decree must be affirmed, but without costs.
The decree of the Chancellor was affirmed by the following vote:
For affirmance — Clement,. Oornelisqn, Elmer, Fort, PIaines, Van Dyke, Vail. 7.
For reversal-^-Kennedy, Vredenburgh, Wales. 3.