In re McCullough Trucking Co.

Decision Date20 August 1923
Docket Number2969,2970.
Citation292 F. 103
PartiesIn re McCULLOUGH TRUCKING CO. v. McCULLOUGH. MILBERG
CourtU.S. Court of Appeals — Third Circuit

Gross &amp Gross and Benjamin Gross, all of Jersey City, N.J., for trustee.

Jerome J. Dunn, of Jersey City, N.J., for McCullough.

Before BUFFINGTON and DAVIS, Circuit Judges, and McKEEHAN, District judge.

DAVIS Circuit Judge.

On August 9, 1922, the McCullough Trucking Company was adjudicated a bankrupt, and Samuel Milberg was appointed trustee in bankruptcy. The assets of the bankrupt estate were incumbered by two chattel mortgages, executed by the bankrupt to William McCullough. The first mortgage for $95,500 was dated September 23, 1920, and the second for $4,000 was dated March 10, 1922.

There is no question but that the money mentioned in the mortgages as the consideration was advanced by the mortgagee to the bankrupt. The question is whether or not the affidavits attached to the mortgages comply with the requirements of the Chattel Mortgage Act of New Jersey. Section 4 of that act provides that--

'Every mortgage or conveyance intended to operate as a mortgage of goods and chattels hereafter made, which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage, having annexed thereto an affidavit or affirmation made and subscribed by the holder of said mortgage, his agent, or attorney, stating the consideration of said mortgage and as nearly as possible the amount due and to grow due thereon.' 1 Compiled Statutes of New Jersey, p. 463.

The rule formerly prevailing in the courts of New Jersey was that strict technical compliance with this statute was absolutely necessary. Graham Button Co. v. Spielmann, 50 N.J.Eq. 120, 24 A. 571; Spielmann v. Knowles, 50 N.J.Eq. 796, 27 A. 1033. But the present rule is that, in the absence of fraud, substantial compliance only is required. The 'consideration' which the mortgagee must fully and truthfully state is the consideration actually received by the mortgagor. If the affidavit in some way shows this consideration and how it came into existence, the mortgage will not be set aside because the affidavit is inartificially drawn. Hunt v. Ludwig, 93 N.J.Eq. 314, 116 A. 699; American Soda Fountain Co. v. William E Stolzenbach, 75 N.J.Law, 721, 68 A. 1078, 16 L.R.A. (N.S.) 703, 127 Am.St.Rep. 822; Howell v. Stone & Downey, 75 N.J.Eq 289, 292, 71 A. 914; Simpson v. Anderson, 75 N.J.Eq. 581, 73 A. 493; Breit v. Solferino, 77 N.J.Law, 436, 72 A. 79; Shupe v. Taggart, 93 N.J.Law, 123, 107 A. 50. Any substantial deviation from the truth, however, will invalidate the mortgage. Collerd v. Tully, 78 N.J.Eq. 557, 560, 80 A. 491, Ann. Cas. 1912C, 78; In re Novelty Webb Co., 236 F. 501, 149 C.C.A. 553; McCullough v. McCrea (C.C.A.) 287 F. 342.

The following affidavit was annexed to the first mortgage:

'William McCullough the mortgagee in the foregoing mortgage named being duly sworn on his oath says that the true consideration of the said mortgage is as follows, viz.: 68 promissory notes, containing three series, first series shall include 12 notes of $1,000.00 each interest 6 per cent., second series shall include 55 notes at $1,500.00 each interest 6 per cent., and the third series shall include 1 note at $1,000.00 interest 6 per cent., making a total of $95,500.00, and deponent further says that there is due on said mortgage the sum of ninety-five thousand five hundred dollars besides lawful interest thereon from the fourth day of October, 1920.'

The affidavit states neither the maker nor the payee of the notes. It does not disclose whose promissory notes were secured by the mortgage nor the nature of the obligation for which they were given. It is so defective...

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4 cases
  • IN RE DE WITT
    • United States
    • U.S. District Court — Western District of Michigan
    • September 30, 1926
    ...N. J. Law, 721, 68 A. 1078, 16 L. R. A. (N. S.) 703, 127 Am. St. Rep. 822; Shupe v. Taggart, 93 N J. Law, 123, 107 A. 50; Milberg v. McCallough (C. C. A.) 292 F. 103. The affidavit annexed to the mortgage in question was made by the vice president of the mortgagor company. This was not a su......
  • Haines v. Keating
    • United States
    • U.S. Court of Appeals — Third Circuit
    • February 25, 1924
    ... ... Graham Button ... Co. v. Spielmann, 50 N.J.Eq. 120, 24 A. 571; In re ... Novelty Web Co., 236 F. 501, 149 C.C.A. 553; ... McCullough v. McCrea (C.C.A.) 287 F. 342. But the ... present rule is that, in the absence of fraud, substantial ... compliance only is ... [296 F. 898] ... ...
  • Keystone Finance Corporation v. Krueger
    • United States
    • U.S. Court of Appeals — Third Circuit
    • February 23, 1927
    ...N. J. Law, 721, 68 A. 1078, 16 L. R. A. (N. S.) 703, 127 Am. St. Rep. 822; Shupe v. Taggart, 93 N. J. Law, 123, 107 A. 50; Milberg v. McCullough (C. C. A.) 292 F. 103; Haines v. Keating (C. C. A.) 296 F. It follows that neither on the ground of a parol assignment, nor of the bill of sale, d......
  • McUllough v. Sullivan
    • United States
    • New Jersey Supreme Court
    • February 1, 1926
    ...of the United States District Court was subsequently affirmed by the United States Circuit Court of Appeals for the Third Circuit. 292 F. 103. There was a subsequent chattel mortgage between the same parties which was held valid. This has, however, no bearing upon the present action. The ch......

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