Knowles Loom Works v. Vacher

• Decision Date: 21 February 1895
• Citation: 31 A. 306,57 N.J.L. 490
• Parties: KNOWLES LOOM WORKS v. VACHER et al.
• Court: New Jersey Supreme Court

31 A. 306

57 N.J.L. 490

KNOWLES LOOM WORKS

v. VACHER et al.

Supreme Court of New Jersey.

Feb. 21, 1895.

(Syllabus by the Court.)

On case certified from the Passaic county circuit by Justice Dixon.

Action by Knowles Loom Works against J. Vacher and R. J. Hoguet. Case certified. Judgment for defendants.

The questions to be determined in this case are presented by the following certificate: "Paterson, N. J., May 3, 1894. This suit relates to the title of ten silk looms, which, about August 1st last, were in the possession of the defendants, and were then replevied by the plaintiff, and returned under bond to the defendants. The value of the looms was then $1,487.50, which amount, with interest thereon from August 1, 1893, the plaintiff will be entitled to recover if it be entitled to a judgment. The looms were originally the property of the plaintiff, a Massachusetts corporation located in Worcester, Mass., and were delivered by it to the Paris Silk Company, a New Jersey corporation located in Paterson, under a contract for the sale of them made orally in the city of New York between an agent of the plaintiff and an agent of the Paris Silk Company. According to the terms of the contract, the looms were to remain the property of the plaintiff until they were fully paid for, and were to be paid for in installments, at periods ranging from thirty days to six months after delivery. This contract was never formally reduced to writing, but its terms can be gathered from letters written to each other by the parties in Worcester and Paterson, which refer to the oral contract. In pursuance of the contract the looms were delivered by the plaintiff to the silk company, in Paterson, in the latter part of May, 1893, and shortly afterwards notes were given by the silk company to the plaintiff for the amount of the purchase money. These notes have never been paid, and, after the maturity of the note first due, the plaintiff tendered them all back to the silk company before issuing the writ in this cause. On July 5, 1893, the looms being in the possession of the Paris Silk Company, at Paterson, were mortgaged by that company to the defendant Hoguet to secure a pre-existing debt due from the company to Hoguet, Mr. Hoguet having agreed with the company that whatever he realized from the mortgage he would distribute among the creditors of the Paris Silk Company proportionately. At that time the silk company was insolvent, and Hoguet knew It, but he had no notice that the looms were not the property of the Paris Silk Company. The title which the defendants now set up depends upon that mortgage. Whether, under these circumstances, the plaintiff or the defendants are entitled to the judgment of the court is a question reserved and certified to the supreme court for its advisory opinion. Jonathan Dixon, Judge."

Argued before the CHIEF JUSTICE and DEPUE and VAN SYCKEL, JJ.

W. B. Gourley, for plaintiff.

J. W. Griggs, for defendants.

VAN SYCKEL, J. On behalf of the defendants it is insisted that the sale by the plaintiff to the silk company, being a conditional one, was void as against the mortgage of Hoguet, by virtue of the provisions of the act of May 9, 1889, entitled "An act requiring contracts for the conditional sale of personal property to be recorded." Laws 1889, p. 421. The important features of this act are contained in the first and second sections, which are quoted as follows: "(1) That in every contract for the conditional sale of goods and chattels hereafter made, which shall be accompanied by an immediate delivery and be followed by an actual and continued change of possession of the things contracted to be sold, all conditions and reservations which provide that the ownership of such goods and chattels is to remain in the person so contracting to sell the same, or other person than the one so contracting to buy them, until said goods or chattels are paid for, or until the occurring of any future event or contingency, shall be absolutely void as against subsequent purchasers and mortgagees in good faith, and as to them the sale shall be deemed absolute, unless such contract for sale with such conditions and reservations therein, be recorded as directed in the succeeding section of this act. (2) That the instruments mentioned in the preceding section shall be recorded in the clerk's office of the county wherein the party contracting to buy, if a resident of this state, shall reside at the time of the execution thereof, and if not a resident of this state, then in the clerk's office of the county where the property so conditionally bought shall be at the time of the execution of such instrument: provided that in any county where the office of register of deeds exists, or hereafter may be created, such instruments shall be recorded in the office of such register." The silk company was the party contracting to buy, and was a resident of this state, located at the city of Paterson, in the county of Passaic. The contract of sale was not recorded as required by the act of 1889.

Two points are involved: First, whether the statute of 1889 is applicable to this case, in view of the fact that the contract of sale was made in the state of New York; and, second, whether the defendant Hoguet, in taking a mortgage to secure a pre-existing debt due from the Paris Silk Company to him, became a mortgagee in good faith.

The act of 1889 directs the contract to be recorded in the county where the buyer resides, if a resident of this state at the time of the execution of the contract, and, if not a resident of this state, then in the county where the property shall be at the time of the execution of such instrument. The manifest purpose of the act is to render inefficacious the conditional sale of all goods held in this state, where the contract of sale is not recorded. There is an implied mandate in the act that the contract of sale shall be in writing; otherwise it could not be recorded, and the act would be futile. The situs of the property, and not the lex loci contractus, determines the validity of such sales. The contract in this case was made in New York, but the property was to be delivered, and was delivered to and held by the purchaser, in this state. Great contention and uncertainty in the title to personal property would be produced if purchasers and mortgagees were bound to ascertain whether the vendor or mortgagor acquired title in another state before they could contract with safety in reference to it. Judicial decision in this state has been hostile to such an interpretation of the law. Safe Co. v. Norton, 48 N. J. Law, 410, 7 Atl. 418. Where the situs of personal property is in this state, it is subject to our statutory provisions in the adjudications regarding it in our own courts, in a suit to which a citizen of this state is a party. The force of our statutes is recognized in Varnum v. Camp, 13 N. J. Law, 326, and in Bentley v. Whittemore, 19 N. J. Eq. 462. "No one can seriously doubt that it is competent for any state to adopt such a rule in its own legislation, since it has perfect jurisdiction over all property, personal as well as real, within its own territorial limits; nor can such a rule made for the benefit of innocent purchasers and grantors be deemed justly open to reproach of being founded in a narrow or selfish policy." Story, Confl. Law, § 390. It seems clear that the New Jersey statute must dominate this controversy.

As to the other question to be discussed, there is more conflict in the cases. The New York chattel mortgage act of 1833, from which our act is copied, was construed by the New York court of appeals In Van Heusen v. Radcliff, 17 N. Y. 580. It is there held that an assignee in trust for creditors cannot impeach a prior mortgage for want of registry. Judge Denio, in deciding that case, relied upon previous decisions in New York that a voluntary trustee under such an assignment was not a bona fide purchaser for value. This case, I think, was well decided. An assignee for the benefit of creditors acquires no title, except strictly that vested in his assignor. He stands in the place of the assignor, with the mere duty of distributing his property among such creditors as may elect to come in for a dividend. The title of the assignor is subject to the prior unregistered mortgage, and in that condition it passes to the assignee. Standing as the mere representative of the assignor, the assignment being voluntary and without consideration, he acquires no title which can be adverse to that of the prior mortgagee. He takes nothing except what his assignor had at the time of the assignment. He acquires, as against his assignor, no lien upon the property for his own benefit, upon which he can establish a claim hostile to one who holds by a previous conveyance. The current of adjudication undoubtedly is that one who takes by voluntary assignment for the benefit of creditors cannot successfully assail a prior equitable title or an unregistered conveyance previously made by the assignor. In the subsequent case of Thompson v. Van Vechten, reported in 27 N. Y. 580, Judge Denio ruled that a precedent debt does not qualify the mortgagee of a chattel as one in good faith, under the New York act of 1833, so as to entitle him to question a prior mortgage for a default in refiling it. In support of this decision he cites the cases of Van...