Baker v. Josephson

46 A.2d 904, 138 N.J. Eq. 107, 1946 N.J. LEXIS 349

• Court: Supreme Court of New Jersey
• Decided: May 31, 1946
• Status: Published

Opinion

The opinion of the court was delivered by

Bodine, J.

The bill in this case was brought for the purpose of impressing a lien upon property of David Josephson, who had been the owner of premises situate at 11 South Oakland Avenue and 11 South Nashville Avenue, Ventnor City, New Jersey. Title to these properties was in a corporation known as the Equity Corporation, subject to mortgages outstanding. The stock in the Equity Corporation was owned by Josephson, but he had already transferred the same in an appropriate manner to Celia Josephson as a pledge to secure advances already made in the sum of $26,831.97.

The Vice-Chancellor said, with respect to the advances: “I do not think I have ever seen a ease where the proofs are clearer than they are in this case, where better accounts have been kept than there were in this case, and I don’t see any thing on the opposite side that would justify in any way my finding otherwise.” Notwithstanding this finding, with which we are more than satisfied, the Vice-Chancellor by-passed the interest of Celia Josephson secured by the pledge of the stock by saying that her claim was an old one which she could have reduced to judgment at any time, and hence she lost her priority.

The law does not require a bona fide pledgee of stock to reduce a claim to judgment in order to retain the benefits of the security.

The pledge of stock to secure a bona fide debt, creates a lien thereon till the debt is discharged. Before payment, a subsequent creditor had no right thereto in law or equity. Boulter v. Joliet National Bank, 295 Ill. 594.

The decree below, so far as indicated, will be reversed, with costs.

For affirmance — Parker, Wells, Rafferty, Dill, JJ. 4.

For modification — The Chief-Justice, Bodine, Donges, Heher, Oliphant, McGeei-ian, JJ. 6.