Meltz v. E. Orange Bank

• Decision Date: 13 May 1929
• Citation: 146 A. 194
• Parties: MELTZ v. EAST ORANGE BANK et al.
• Court: New Jersey Court of Chancery

146 A. 194

MELTZ

v. EAST ORANGE BANK et al.

Court of Chancery of New Jersey.

May 13, 1929.

(Syllabus by the Court.)

Suit by Ray Meltz against the East Orange Bank and others. Bill dismissed.

Spaulding Frazer, of Newark (Samuel Cohen, of Newark, of counsel), for complainant.

Edward O. Stanley, Jr. (of Pitney, Hardin & Skinner), and Arthur T. Vanderbilt, both of Newark, Esq. for defendants Savings Investment & Trust Co., Mortgage Bond Co., and East Orange Bank.

Egidio W. Mascia, of Newark, for defendants Michael Barone and others.

Domeinick M. Acocella, of Newark, for defendants Tobio Santoro and others.

Morris Isserman, of Newark, for defendants Charles P. Gillen, Spruce Realty and Mortgage Co., and Plaza Realty Co.

BERRY, Vice Chancellor. In June, 1923, the complainant assigned a mortgage of the Atlas Realty Company in the principal sum of $82,404 (eighth as to one tract of land and sixth as to another) to the East Orange Bank as collateral security "to secure the said The East Orange Bank for any moneys advanced, liability, loss, damage, charges, and expenses, by reason of their discount of and loans upon any and all notes of Morris Meltz, Atlas Realty Company, Troy Realty Company, or any or either of them, heretofore or hereafter made to The East Orange Bank, including a certain note for $5,000, dated June 7, 1923 and certain other notes aggregating the sum of $23,546.50 as well as all future notes held by The East Orange Bank, together with any extensions or renewals thereof, with all interest and charges thereon."

The complainant, her husband, Morris Meltz, and her son, Harry Meltz, were the sole stockholders of the Atlas Realty Company and the Troy Realty Company. It is admitted that the assignment was made to induce further credit to Morris Meltz and the two corporations. On the date of the assignment the obligations of Morris Meltz and the two corporations held by the bank amounted to $28,546.50. These obligations were later increased to $81,909.40, which, with accrued interest of $3,121, amounted on February 17, 1925, to $85,040.40. On September 18, 1923, Atlas Realty Company, by bargain and sale deed, conveyed the premises covered by the mortgage to Mortgage Bond Company of New Jersey subject to the incumbrances. A contemporaneous declaration of trust executed by the grantee to the grantor (but unrecorded) declared that the conveyance was upon trusts therein recited which, shortly, were to the effect that the conveyance was made to further secure the East Orange Bank and the First National Bank of Belleville for loans made and to be made to the grantor, to Troy Realty Company, and to Morris Meltz, and to reconvey upon payment in full of all obligations due and owing to the said banks. This document further provided for the collection of the rents and their disposition and application, and also provided for sale of the premises by the grantee on default therein specified. Default occurred, and on January 15, 1924, Atlas Realty Company executed a quitclaim deed to Mortgage Bond Company of New Jersey for the premises previously conveyed by deed of September 18, 1923, and surrendered the trust agreement. Both conveyances referred to were assented to in writing by the three Meltzes, as all of the stockholders of the Atlas Realty Company. Thereafter, on November 20, 1924, the Mortgage-Bond Company of New Jersey sold the premises to the defendant Sinnema "free of encumbrances," taking as payment certain cash, purchase-money mortgages, and securities. Out of the proceeds of this sale the various in cumbrances against the property, including the Ray Meltz...