19 N.J. Eq. 402 | New York Court of Chancery | 1869
The defendants, the Rahway White Rubber Company, on the 14th of August, 1867, executed a mortgage to the complainants as trustees for the holders of bonds to the amount of $60,000, issued, or to be issued by them. This mortgage was on property at Rahway, and -was on the same day proved and recorded in the clerk’s office of Union county, in the records of mortgages. It included the real estate of the company and the fixed machinery upon it, and also a large amount of personal estate, an inventory of which was annexed to the mortgage. The real estate and fixed machinery had been mortgaged to the defendants, the National Bank of Rahway, to secure the payment of $15,000 and interest. For the foreclosure of that mortgage a suit was pending in this court, but whether a decree had been made on it prior to the mortgage to these trustees, does not appear. Under the decree in that suit, the real estate and fixed machinery were sold by the sheriff to the bank, on the 31st of October, 1867, for $10,000. The bill in this suit, is for the foreclosure and sale of the personal property in the mortgage to the complainants; all the real estate and fixtures having been sold by the sheriff. The bank is made a defendant, because, on the 2d day of November, 1867, it obtained a judgment against the company in the Supreme Court for $5766.90, the balance of its mortgage debt, and issued an execution by which the mortgaged personal property was levied upon. The defendants, Pfeizer & Co., obtained a judgment against the company in the Union county Circuit Court, on the 5th day of August, 1867, on which an execution was issued on the 5th of September following, and a levy made on said personal property. The personal property remained in possession of the company until the 31st day of October, 1867, when the complainants, as trustees, took possession of it, on account of default made by the company in payment of the mortgage debt.
The complainants claim that, as the mortgage to them was
The defence of want of authority to execute the mortgage, does not appear to me to be sustained. Besides the presumption arising from the fact that the mortgage is executed under the corporate seal, and signed by the president and attested by the secretary of the company, it appears by the minutes that its execution was authorized by a meeting held on the 21st of February, 1867. At th'is meeting, three of the five directors were present, and although there is some proof that the entry is incorrect in stating that all three concurred in the resolution, yet it appears that .two did concur unconditionally, and- as of five directors three are a quorum, and two a majority of the three, the resolution must be taken as valid and binding. The objection to the regularity of the entry in the minute book, that it was made by a stranger, and never read to and approved by the board, is obviated by the fact that the entry was made under the direbtion of the secretary, from a minute ma.de by'him at the time on a loose sheet of paper, and after entry was compared with this sheet by him. It is not necessary that the minutes of a corporation should be written up by the secretary in his own handwriting, or that they should be approved by the board. And in fact, if it was shown that the resolution had been passed by the board when lawfully assembled, it would be valid, although never entered upon the minutes.
The other ground, that the mortgage is void on account of the insolvency of the company, and their having suspended business for want of funds, must be'next considered. This mortgage was given on the 14th of August, 1867. That the resolution under which it was executed was passed in February, or that another mortgage had been executed some
If the construction of the act would permit us to look to the time of the execution of the first mortgage, or of the issue of the bonds, the evidence on this point is so indefinite and unsatisfactory, that no decree could be founded on it. The evidence of the witnesses on this subject, who are the principal bondholder and his son, is evasive, and abounds with want of recollection of' amounts, dates, and transactions, which they should recollect, or as to which their deficiency of memory could have been supplied by reference to means within their power. No court could be satisfied to make a decree which depended upon it. For aught that appears, most of the money advanced on these bonds by the persons to whom they were issued, and by whom they are held, may have been advanced after the date of the mortgage. In fact, from the manner of testifying by these witnesses, I am far from being satisfied that any money or valuable consideration was advanced upon the faith of these bonds, at all.
But the question now is, the situation of this company on the 15th of August, 1867. The whole of their real property and fixed machinery were mortgaged to the bank for $15,000. That mortgage was being foreclosed, and the decree must have been made at that time, or in a few days after, as the
If the company were insolvent, or had suspended their drdinary business for want of funds, this mortgage is void as against creditors, by the provisions of the act, and this without reference to the question whether the bondholders knew of the insolvency. I concur in the views and reasoning of Chancellor Williamson, in Holcomb v. The New Hope and Delaware Bridge Co., 1 Stockt. 458, -that the object of this statute was to prevent a company, that was either insolvent, or in contemplation of insolvency, from preferring some
These views of the facts abd the law, constrain me to hold that the mortgage to the complainants is void against the bank, and Pfeizer & Go., and other creditors of the company.