Dunham v. Cramer

51 A. 1011, 63 N.J. Eq. 151, 18 Dickinson 151, 1902 N.J. Ch. LEXIS 99

• Court: New Jersey Court of Chancery
• Decided: April 11, 1902
• Status: Published

Opinion

Gruy, V. C.

The defendant’s chattel mortgage is first challenged because the act of March 7th, 1893 {Gen. Siat. p. Sill § II), declares that every mortgage upon household goods in the use and possession of any family in this state, not given to secure the purchase-money for such goods, shall be void unless signed, sealed, executed and acknowledged by the husband and wife of the family, &c., and the complainant contends that the fact that the mortgagor’s wife has not signed the chattel mortgage makes it void under 'that statute.

The terms of the act require more than this to make a chattel mortgage void. It must appear that the household goods included in the mortgage were in the use and possession of a family in this state.

All that here appears is that the mortgagor had them in his possession in his hotel. He may have had no family in this state, or if he had, they may not have had these household goods in use. He may'have them in the hotel, they may live elsewhere. There is no proof that it is not a purchase-money mortgage. All these must affirmatively appear in order to even claim the enforcement of a penal statute. It is doubtful whether, if such proof were exhibited, such a chattel mortgage would in equity be held to be void any further than to prevent its being considered a lien on the household goods. Green v. McCrane, 10 Dick. Ch. Rep. 440. For failure of proof the mortgage cannot be declared void to any extent on the first ground.

The complainant also disputes the validity of the chattel mortgage because, he insists, that the affidavit of consideration does not comply with the requirements of the Chattel Mortgage act.

The statute requires that there shall be annexed to the chattel mortgage the affidavit of the holder, stating the consideration of the mortgage and, as nearly as possible, the amount due and to grow due thereon. The affidavit in this case is made by the mortgagee, and states

“that the true consideration of said mortgage is as follows, viz.: For the payment of a certain promissory note dated July 8th, 1898, for the sum of eight hundred dollars, this chattel mortgage given as collateral security for the payment of the above note, and there is due on said mortgage the sum of eight hundred dollars, besides lawful interest from the eighth day of July, 1898.”

In the case of Fletcher v. Bonnet, 6 Dick. Ch. Rep. 615, the court of appeals declared that, in construing affidavits of consideration annexed to chattel mortgages, if the affidavit refers to the annexed chattel mortgage, the affidavit and the mortgage must be read together, to ascertain whether there is a sufficient compliance with the terms of the statute. An examination of the chattel mortgage to which this affidavit is annexed affords no aid to the deficiencies of the affidavit, for the chattel mortgage recitals make less disclosure of the transaction than does the affidavit itself. Nothing in this affidavit shows whose promissory note is secured by the chattel mortgage in question, nor who is the holder of that promissory note, nor for what consideration, whether a loan of money, or a sale of goods, or how otherwise the promissory note or chattel mortgage came to be given, nor how the debt was created to secure which the chattel mortgage was made. An affidavit so markedly deficient in the statement of the transaction out of which the mortgage arose affords no opportunity to inquiring creditors of the mortgagor to ascertain whether the chattel mortgage is given for a valuable consideration, which would be binding upon them, or for a merely voluntary one, which would not be obligatory upon them. It was settled in the ease of Graham Button Co. v. Spielmann, 5 Dick. Ch. Rep. 122, 123, that the affidavit of consideration annexed to a chattel mortgage must substantially show how the relation of creditor and debtor between the mortgagor and the mortgagee was created. This case was carried to the court of appeals (sub nom. Spielmann v. Knowles, 5 Dick. Ch. Rep. 796), and was there unanimously affirmed for the reasons given in this court. The interpretation there given of the statutory requirement that the affidavit of the holder shall state the consideration of the mortgage condemns the affidavit now under consideration as insufficient.

This chattel mortgage of the defendant is also challenged because it was not recorded for over four weeks after it had been made and delivered. The mortgage is dated the 8th day of July, 1898. The affidavit of consideration and the acknowledgment bear the same date. The certificate of the clerk of Cape May shows that it was recorded on the 10th day of August, 1898. Nothing in the case in any way explains this delay in the recording of the mortgage. Its effect was to enable the mortgagor to appear to his creditors and those dealing with him to own the chattels mortgaged, without lien upon them. This might readily operate as a fraud upon creditors, but irrespective of this possibility, or of the actual fact as to this incident, the statute has been interpreted to declare a mortgage so reserved from the record for that cause void. -There must be, under the terms of the act, an immediate taking of possession of the chattels mortgaged, or there must be an immediate recording of the mortgage. Either course, when taken, is a warning to creditors who may thereafter deal'with tire mortgagor. If neither be observed, the chattel mortgage is void as to creditors. Roe v. Meding, 8 Dick. Ch. Rep. 368. When a chattel mortgage is kept oft the record for more than four weeks after it is made and delivered, and nothing appears which explains so long a delay, it cannot be said that its recording is immediate.

The stipulation of the parties provides that the question of good faith of the transactions attacked by the bill and amendment shall be passed. This agreement does not waive the noncompliance with the terms of the statute regarding chattel mortgages. If the provisions of that act are not obsérved, the chattel mortgage is, for that reason, void as against creditors, irrespective of bad faith or of any intention to defraud. Graham Button Co. v. Spielmann, 5 Dick. Ch. Rep. 128; affirmed on appeal, Id. 796.

The complainant also attacks the validity of the bills of sale, because they appear, to be, in legal effect, chattel mortgages, and do not comply with' the requirement of the Chattel Mortgage act.

The stipulation admits that these bills of sale were given by way of security, and that they were in the nature of mortgages.

Certified copies of them are produced. They are, apparently, bills of absolute sale of the bottling-house tó the defendant Lewis W. Cramer and of the stock of liquor therein to the defendant trading as William C. McDonnell & Company. They are each acknowledged by the defendant William M. Cramer, and have both been recorded. Neither has annexed any affidavit of consideration by the holder. They are admitted to be chattel mortgages, and, by the express terms of the Chattel Mortgage act, are void as against the, creditors of the maker, because neither has annexed to it the affidavit óf the holder stating the consideration of the mortgage. The statutory requirements extend, not only to every instrument which is in terms a mortgage, but also to every “convéyance intended to operate as a mortgage,” &c. Chattel Mortgage act, Gen. Stat. p. 2118 § 62.

I will advise a decree that the chattel mortgage and the two bills of sale mentioned in the pleadings are void as against the complainant’s judgment, execution, and levy. The complainant is entitled to costs.