Felin v. Arrow Motor Mach. Co.
| Decision Date | 26 April 1924 |
| Docket Number | No. 53/546.,53/546. |
| Citation | 124 A. 448 |
| Parties | FELIN v. ARROW MOTOR MACH. CO. |
| Court | New Jersey Court of Chancery |
(Syllabus by the Court.)
Action by Anton Felin against the Arrow Motor Machine Company. On motion for directions to receiver. Opinion entered.
Edward R. McGlynn, of Newark, for the motion.
Stamler, Stamler & Koestler, of Elizabeth, for the receiver.
BACKES, V. C.The defendant is an insolvent corporation. In October, 1922, it executed a real estate mortgage on its factory building, and a chattel mortgage on its machinery, fixtures, and personal property contained therein, to Anton Felin, its president, to secure $20,000. The mortgages were assigned to Robert J. Metzler, Inc., for a loan of $15,000 and a bonus of $5,000. The mortgages were made to Felin as a dummy for the Metzler Company. The receiver sold the land and personal property as a unit for $34,000, subject to real estate mortgages of $21,000, but free and clear of the two mortgages of the Metzler company, and a subsequent real estate mortgage of the Elizabeth Trust Company, under an order of the court, consented to in open court, in writing, by the solicitor of the Metzler Company. The present application is by the Metzler Company to direct the receiver to pay its mortgage debt out of the proceeds. The receiver resists and sets up that the affidavit annexed to the chattel mortgage is untrue. It is sworn to by Anton Felin, the mortgagee, who says, "That the true consideration of said mortgage is the sum of $20,000 cash money this day advanced to the Arrow Motor Machine Company." That statement is false. Only $15,000 was paid. The chattel mortgage is invalid. Hunt v. Ludwig, 93 N. J. Eq. 314, 116 Atl. 699, aff'd (N. J. Err. & App.) 118 Atl. 839.
The receiver attacks the realty mortgage on the ground that the resolution authorizing it was passed at a meeting of only two directors of the insolvent company. Conceding this to be true, it does not invalidate the mortgage. The Court of Appeals, in the case of Kuser v. Wright, 52 N. J. Eq. 825, 31 Atl. 397, in a similar case, held that a mortgage authorized at a meeting of two of three directors, the third one having no notice of the meeting, was valid, and that it was a subject into which those who are dealing with the corporation was not bound to inquire. The Metzler Company had no notice. Felin, the nominal mortgagee, knew, but he was a mere figurehead for the convenience of the insolvent company and the Metzler Company, and notice to him...
To continue reading
Request your trial
-
Jarecki v. Manville Bakery
...Hunt v. Ludwig, 93 N.J.Eq. 314, 116 A. 699 (Ch.1922), affirmed 94 N.J.Eq. 158, 118 A. 839 (E. & A. 1922); Felin v. Arrow Motor Machine Co., 96 N.J.Eq. 44, 124 A. 448 (Ch.1924); Finkel v. Famous Lunch Room Co., 100 N.J.Eq. 85, 135 A. 51 (Ch.1926); Sherman v. Union County, &c., Co., 108 N.J.E......
-
In re Lauer
...affidavit of the chattel mortgagee the mortgage is invalid, because in such case the true consideration is not expressed. Felin v. Arrow Co., 96 N.J.Eq. 44, 124 A. 448, In re Feifer Bros., D.C., 21 F.Supp. 620, McCullough v. McCrea, 3 Cir., 287 F. 342. The mortgagee has attempted to show th......
-
de Yoe v. Harper Bros., Inc.
...that part of the consideration mentioned in the affidavits attached to the mortgages represented bonus moneys. Felin v. Arrow Motor Machine Co., 96 N.J.Eq. 44, 124 A. 448. In Lion Shoe Co. v. Price, 108 N.J.Eq. 553, 155 A. 775, it is held that the true consideration must be set forth not me......
-
Moore v. Preiss Trading Corp.
...deviation from the truth, however honestly made, will invalidate the mortgage as against creditors." In Felin v. Arrow Motor Machine Co., 96 N.J.Eq. 44, 124 A. 448, the consideration stated was $20,000, whereas in fact the sole advance was $15,000; the balance being retained by the mortgage......