Knickerbocker Trust Co. v. Penn Cordage Co.

• Decision Date: 14 November 1901
• Citation: 62 N.J.E. 624,50 A. 459
• Parties: KNICKERBOCKER TRUST CO. v. PENN CORDAGE CO. et al.
• Court: New Jersey Court of Chancery

50 A. 459

62 N.J.E. 624

KNICKERBOCKER TRUST CO.

v. PENN CORDAGE CO. et al.

Court of Chancery of New Jersey.

Nov. 14, 1901.

(Syllabus by the Court.)

Bill by the Knickerbocker Trust Company against the Penn Cordage Company and oth ers to foreclose a mortgage. Decree for com plainant.

The bill in this case is filed to foreclose a mortgage made by the defendant the Penn Cordage Company, a corporation of the state of New Jersey, to the Knickerbocker Trust Company, a corporation of the state of New York, to secure the payment of numerous bonds of the cordage company, amounting in all to $100,000, with interest, etc. The complainant mortgagee, the Knickerbocker Trust Company, makes defendants the mortgagor, the Penn Cordage Company, Thomas E. Shields, receiver of the Penn Cordage Company, appointed in an Insolvency suit sub nom. Reilly v. Cordage Co. (in this court) 44 Atl. 161, and also Alexander Simpson and others, who claim to be holders of or interested in a second mortgage made by the Penn Cordage Company to one Constantine P. Ralli, and also the Pennsylvania Railroad Company, in respect to a judgment recovered by it against the Penn Cordage Company, and Claud S. Fries, in respect to a judgment recovered by him against the Penn Cordage Company. The complainant in its bill sets forth a description of the mortgaged premises, which consists of fifteen acres and twenty-two hundredths of an acre of land, situate at Beverly, in the county of Burlington. The bill states that the mortgage contains the following clause, "Together with all the improvements thereon, or that thereafter might be erected thereon, and together with the franchises of the said the Penn Cordage Company, and all its income whatsoever, and all the goods, chattels, and personal property then in the possession of the said Penn Cordage Company, in, of, and about the said described premises in the town of Beverly, in the county of Burlington and state of New Jersey, and all the property, real, personal, and mixed, now owned by the Penn Cordage Company, and also all the goods, chattels, and personal property that may hereafter be acquired by said Penn Cordage Company." The bill sets forth the execution of the complainant's mortgage with the formalities incident to both a real-estate and a chattel mortgage, and alleges that it was recorded in the office of the clerk of Burlington county on the 10th day of April, 1896. The entire series of bonds secured by the complainant's mortgage, amounting in all to $100,000, has been issued, and they are all now outstanding and unpaid, with considerable accumulations of interest; and, by reason of these defaults in the payment of interest and of other defaults set forth in the bill, the principal money of the mortgage has come to be due and payable, and the holders of the bonds in accordance with the terms of the mortgage have requested the complainant to foreclose it. The bill of complaint sets forth the making of a second mortgage to one Constantine P. Ralli, for the sum of $50,000, dated October 4, 1897, and recorded in Burlington county clerk's office, and subsequently assigned to the Guarantors' Finance Company, which company having become insolvent, Alexander Simpson and others were appointed receivers thereof. The bill alleges that the Guarantors' Finance Company assigned the lastmentioned mortgage for $50,000 to the People's Bank of Philadelphia, a corporation which has also been adjudged insolvent, and whereof Thomas W. Barlow has been appointed receiver. The receivers of each of the above-named corporations are made defendants in respect to their several interests in the last-named mortgage. Several judgment creditors of the Penn Cordage Company are also made defendants.

The prayer of the bill is for the foreclosure and sale of the mortgaged premises, including the personal property described in the mortgage or covered by the general provisions of the same, or, if it be deemed more equitable and just, that the mortgaged premises, with the appurtenances, may be sold. Thomas E. Shields, the receiver of the defendant the Penn Cordage Company, answers the bill of complaint, substantially admitting the execution of the complainant's mortgage as alleged in the bill, so far as it is a real-estate mortgage, but charging that it was not executed in accordance with the statutes of this state regulating the execution of chattel mortgages, and was not recorded as a chattel mortgage, and does not cover any of the personal property which the Penn Cordage Company then owned or which it afterwards acquired, and the receiver claims that the personal property of the Fenn Cordage Company vested in him as receiver of that company, free and clear of the lien of the complainant's mortgage. Mr. Shields, the receiver, in his answer makes the same allegation with relation to the mortgage made by the Penn Cordage Company to Constantine P. Ralli, and also charges that the latter mortgage is entirely void for want of consideration. He alleges that the receivers of the Guarantors' Finance Company, and the receiver of the People's Bank, who had come by assignment to be interested in the Ralli mortgage, had filed their claim under it with the receiver in the insolvency suit of Reilly v. Cordage Co.; that their claims were disallowed by the receiver; that appeals from the disallowance have been taken, which are yet unheard; and he claims that the disallowance stands unreversed, and the said mortgage and bond accompanying the same are invalid. The defendant Shields further alleges his appointment as receiver of the Penn Cordage Company on December 7, 1897; and that a number of the defendants named in the complainant's bill in this case as judgment creditors recovered their judgments after his appointment; and he insists that no judgment against the Penn Cordage Company is forceful against his title as receiver of that company, to have its personal property, unless execution had been issued under such judgment and actually levied against such personal property prior to the appointment of said receiver. The receiver further sets forth his inventory of such property of the Penn Cordage Company as he has determined was personal property, reciting in his answer schedules of the same by separate articles. He alleges that he notified the complainant and all the judgment and other creditors of his said determination, and that no one has appealed therefrom, and that his said determination stands unreversed and cannot now be questioned in these proceedings. He suggests that no disposition of the property covered by the complainant's mortgage can be made without fixing the nature and extent of each of the liens thereon, and he prays that such ascertainment may be made, and that his determination of the question which of said property is realty and which personalty, no appeal having been taken therefrom, may be affirmed, and that the possession of the personalty may be awarded to him subject to such lawful Hens as have been created thereon. The Pennsylvania Railroad Company, a judgment creditor, by its answer disputes the validity of the complainant's mortgage, and also of the mortgage originally made to Ralli, as incumbrances upon the personal property of the Penn Cordage Company, and charges that neither was recorded as a chattel mortgage, as required by the chattel mortgage act of this state. It alleges that it had obtained a levy on execution issued upon its judgment against the personal property of the Penn Cordage Company, on the 1st day of December, 1897, and that its lien thus obtained is the third Hen upon the personal property of the Penn Cordage Company. The defendant Claud S. Fries also answers, and charges that neither the mortgage of the complainant nor the Ralli mortgage was recorded as a chattel mortgage, and insists that his claim is a first lien upon the personal property of the Penn Cordage Company, because of a levy made thereunder on the 12th day of October, 1897, prior to the two mortgages and to the judgments set out in the complainant's bill. He also contends that neither the complainant's nor the Ralli mortgage complies with the requirements of the chattel mortgage act. The defendants Alexander Simpson, Jr., and others, receivers of the Guarantors' Finance Company, and Thomas W. Barlow, receiver of the People's Bank, representing their respective interests in the Ralli mortgage, also answer. They insist that the Ralli mortgage was made upon good and lawful consideration, and that it is a lien upon the lands premises, goods, and chattels, and personal property described in the complainant's bill, and they ask that the amount due on their said mortgage may be paid to them. Issue was joined on these answers, and the cause was brought to a hearing on evidence.

At the hearing, defaults by the Penn Cordage Company in performance of the conditions of the complainant's mortgage, and the proper exercise of the election whereby the principal of that mortgage came to be due, were admitted by the defendants. It was also agreed that Receiver Shields' petition in the case of Reilly v. Cordage Co., asking for an ascertainment and classification of the mortgaged property as realty or personalty, and the testimony taken thereon, should be submitted in this cause as evidence. The answer of the Knickerbocker Trust Company in the suit of Reilly v. Cordage Co. was also admitted in evidence without dispute. A copy of notice is produced, signed and served in that case by counsel for complainant in this cause, in which the complainant specifies the items of property which he claims are permanent fixtures, "constituting part of the soil and as such subject to mortgages on real estate." This was admitted by agreement. The counsel for the complainant admitted that the complainant's mortgage was not recorded as a chattel mortgage. Counsel for defendants admitted that the complainant's mortgage in its present condition was received by the...