Fid. Trust Co. v. Staten Island Clay Co.

• Decision Date: 08 November 1905
• Citation: 70 N.J.E. 550,67 A. 1078
• Parties: FIDELITY TRUST CO. v. STATEN ISLAND CLAY CO. et al.
• Court: New Jersey Court of Chancery

67 A. 1078

70 N.J.E. 550

FIDELITY TRUST CO.

v. STATEN ISLAND CLAY CO. et al.

Court of Chancery of New Jersey.

Nov. 8, 1905.

Bill by the Fidelity Trust Company against Staten Island Clay Company and others to foreclose a mortgage. Decree for complainant as to a portion of the property.

For opinion on petition for rehearing, see 62 Atl. 441.

Samuel W. Beldon, for complainant. Vroom, Dickinson & Scammell, for defendant W. Meredith Dickinson, receiver.

BERGEN, V. C. The Staten Island Terra Cotta Lumber Company executed a mortgage to the complainant, as trustee, to secure the payment of 350 bonds of the par value of $1,000 each. The property covered by the mortgage was real and personal; the latter being described as "all the personal property, slips, basins, ships, cars, machinery and fixtures of said Staten Island Terra Cotta Lumber Company now owned or that may hereafter be acquired by it." In a subsequent paragraph of the indenture the property pledged was further described as "and all other property, real, personal and mixed, fixtures and improvements now held and owned, or which may hereafter be acquired for, or in connection with, the construction, operation and maintenance, reparation or replacement of the business of said lumber company, or as convenient or necessary for the uses or purposes thereof, * * * together with all improvements or additions made or to be made to any or all of said property and estates and their appurtenances by the said party of the first part" The mortgagor company becoming insolvent, receivers were appointed, and the mortgaged property sold and conveyed by them to the defendant corporation, subject to the mortgage referred to, the payment of which was not assumed by the purchaser. After such purchase, the defendant company took possession of the real and personal property and continued the business, purchasing and bringing upon the premises additional chattels, which were used in connection with the business, and are now the subject of this controversy. The mortgage, although intended to be a lien on personal property, was not supported by the statutory affidavit as to the character of the consideration and the amount due, nor was it recorded as a chattel mortgage in the manner required by law. The defendant company, after prosecuting the business for a number of years, became insolvent, and was so adjudged by the United States Circuit Court for the District of New Jersey in proceedings had in that court for that purpose, and in furtherance of which W. Meredith Dickinson was appointed receiver of the corporation. The proceedings in this cause have for their object the foreclosure, by the trustee, of the mortgage given by the Staten Island Terra Cotta Lumber Company, subject to which the defendant company took title to the lands and chattels therein set out, and the only contest is over the right to the possession of the chattels, as to which the receiver raises two questions, claiming, first, that as to the defendant corporation which he represents the mortgage is void as to all the personal property because it was not recorded as a chattel mortgage, and also that it lacks the affidavit essential to permit such record; second, that, even if good as to the chattels which were bought subject to the mortgage, it is no lien on such after-acquired property as was brought on the premises by the defendant company.

The first proposition is not advanced by the receiver on behalf of the creditors of the insolvent corporation, for it is not alleged in the answer that the contest is waged for such a purpose. On the contrary, the answer only claims that the mortgage is void as against the Staten Island Clay Company as a purchaser in good faith of the mortgaged premises, and also that it is void against the answering defendant as receiver of the clay company, because there was no delivery followed by an actual and continued change of possession, and also because the mortgage had not attached to it the statutory affidavit, and was not recorded as a chattel mortgage. No evidence was offered to show that there were any creditors of the Staten Island Clay Company whose debts had become fastened upon the...