Jarecki v. Manville Bakery, Nos. C--2132
| Court | Superior Court of New Jersey |
| Writing for the Court | JAYNE |
| Citation | 7 N.J.Super. 387,71 A.2d 228 |
| Docket Number | Nos. C--2132,F--1995 |
| Decision Date | 07 February 1950 |
| Parties | JARECKI v. MANVILLE BAKERY, Inc. MANVILLE BAKERY, Inc. v. KESSMAN et al. |
Page 387
v.
MANVILLE BAKERY, Inc.
MANVILLE BAKERY, Inc.
v.
KESSMAN et al.
Page 389
[71 A.2d 229] Cy Mittleman, Somerville, for plaintiff Harry Jarecki.
Page 390
John E. Toolan, Perth Amboy, for Manville Bakery, Inc.
Blumberg & Rosenberg, Manville, for defendants Simon and Sherman.
JAYNE, J.S.C.
Expedition has been achieved by the hearing of the two above-entitled actions simultaneously.
Briefly explained, the plaintiff Harry Jarecki had obtained on August 8, 1949, a final judgment in the Law Division of this court against Julius Kessman and Tillie Kessman and immediately caused a levy to be made on certain goods and chattels of the judgment debtors which appeared of record to be encumbered by a chattel mortgage dated July 15, 1948, held by Manville Bakery, Incorporated.
On August 15, 1949, the plaintiff Jarecki, as such judgment creditor instituted in this division his present action to nullify the validity of the chattel mortgage in respect to its apparent priority as a lien superior to that of his judgment and diligent levy.
Also on August 15, 1949, the chattel mortgagee Manville Bakery, Incorporated, filed its complaint to foreclose its mortgage, making defendants therein not only the mortgagors but also the holders of another chattel mortgage alleged to be subordinate to its mortgage.
The paramount issue pertains to the validity of the chattel mortgage of Manville Bakery, Incorporated, in its relation to the lien of the judgment creditor. Specifically the truthfulness and sufficiency of the affidavit annexed to the instrument is the point upon which the attack is concentrated.
The affidavit is not unique. It reads:
'Joseph Onka, Sr., being duly sworn on his oath deposes and says: That he is the President of the Manville Bakery, Incorporated, the mortgagee in the foregoing mortgage named, and has knowledge of the true consideration of said mortgage; that the true consideration of said mortgage is the sum of $17,000. loaned this day by the Manville Bakery Incorporated to Julius Kessman and Tillie Kessman, the mortgagors named in the foregoing mortgage.
[71 A.2d 230] 'That for said loan so made by the Manville Bakery Incorporated to the said Julius Kessman and Tillie Kessman the said Julius Kessman and Tillie Kessman executed and delivered simultaneously herewith
Page 391
to the said Manville Bakery Incorporated 68 negotiable promissory notes in writing, all dated this day, all bearing interest at the rate of 6% Per annum, all payable at the Manville National Bank, Manville, New Jersey, all of said notes being in the sum of $250. each, the first of which notes is payable one month from the date hereof, and the others are payable consecutively monthly thereafter until fully paid.'Deponent further says that there is due and to grow due on said mortgage the sum of $17,000. with interest on each note as above set forth from the date hereof at the rate of six per cent per annum as and when each of said notes become due.'
Although there was prior legislation in this state concerning chattel mortgages, P.L.1864, p. 493, it appears to have been in the year 1878 that a supplement was enacted declaring that 'Every mortgage, not accompanied by an immediate delivery and followed by an actual and continued change of possession of the things mortgaged, is void as against the creditors of the mortgagor and subsequent purchasers and mortgagees in good faith, unless the mortgage or a true copy thereof, having annexed thereto an affidavit or affirmation made and subscribed by the holders of the mortgage, or their agents, stating the consideration of said mortgage, and as near as possible the amount due and to grow due thereon, is filed as directed in the next section.'
A statute of 1820 relating to the entry of judgments on bond and warrant of attorney obliged the plaintiff, his attorney or agent to submit an affidavit stating 'the true consideration of said bond or obligation.' Woodward v. Cook, 6 N.J.L. 160 (Sup.Ct.); Latham v. Lawrence, 11 N.J.L. 322 (Sup.Ct.) It seems evident that the requirement of a like affidavit disclosing the true consideration of the debt secured by a chattel mortgage was designed to accomplish a similar object. Ehler v. Turner, 35 N.J.Eq. 68 (Ch.) Subsequent legislation of interest may be found in P.L.1881, p. 226, P.L.1885, p. 318, P.L.1902, p. 487, P.L.1928, p. 131, R.S. 46:28-5, N.J.S.A.; vide, Bracken v. Smith, 39 N.J.Eq. 169 (Ch.)
As early as 1882 Vice Chancellor Van Fleet remarked in Ehler v. Turner, supra, accommodating to the case the language of Chief Justice Ewing: 'The design of the statute
Page 392
was to prevent the filing of fraudulent chattel mortgages, of chattel mortgages having no real, actual, honest foundation, but intended to create fictitious liens to defeat honest creditors and to cover and protect the property of knavish debtors; and the one measure whereby this design was to be effected, was to require, upon the conscience of the creditor, a statement of the true consideration of the mortgage.'The Vice Chancellor added: 'Simply affirming under oath that the consideration of a mortgage is the sum for which it is given, without disclosing how the debt on which it is founded arose or was incurred * * * cannot, in my judgment, be regarded as either a literal or substantial compliance with the statute, but should be regarded as an evasion of it.'
In Graham Button Co. v. Spielmann, 50 N.J.Eq. 120, 24 A. 571, (Ch.) affirmed 50 N.J.Eq. 796, 27 A. 1033, the same Vice Chancellor explains 50 N.J.Eq. on page 129, 24 A. on page 574; 'To invalidate a chattel mortgage executed in disregard of the requirements of the statute, the person assailing its validity is not required to show, in addition to such fact, that it was executed to defraud creditors. The statute requires nothing of that kind, but, on the contrary, expressly declares that, if the statutory requirements have not been observed in its execution, it shall for that reason, and that reason alone, be treated as void as against creditors. The fault which renders it void as against creditors is not fraud, but the failure of the mortgagee to perform a duty which the statute imposes upon him.' Dunham v. Cramer, 63 N.J.Eq. 151, 51 A. 1011 (Ch.1902).
[71 A.2d 231] Prior to 1903 the statutory sufficiency of the affidavit was judicially regarded as a highly technical requirement. Since the decisions in Metropolitan Store & Saloon Fixture Co. v. Albrecht, 70 N.J.L. 149, 56 A. 237 (Sup.1903) and American...
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