Vonins, Inc. v. Raff

Decision Date31 May 1968
Docket NumberNo. A--122,A--122
Citation5 U.C.C.Rep. 433,101 N.J.Super. 172,243 A.2d 836
Parties, 5 UCC Rep.Serv. 433 VONINS, INC., a corporation of New Jersey, Plaintiff-Respondent, v. Lawrence B. RAFF, Assignee for the Benefit of Creditors of Crest, Inc., Defendant-Appellant, and Edward Lubrano, Crest, Inc., a corporation of New Jersey, and Tone-Crest, Inc., a corporation of New Jersey, Defendant-Respondents.
CourtNew Jersey Superior Court — Appellate Division

Lawrence B. Raff, Newark, for defendant-appellant (Raff, Sherman & Scheider, Newark, attorneys, Terence P. Corcoran, Bloomfield, on the brief).

James M. Havey, Toms River, for plaintiff-respondent (Novins & Novins, Toms River, attorneys).

Before Judges SULLIVAN, FOLEY and LEONARD.

The opinion of the court was delivered by

LEONARD, J.A.D.

Defendant Lawrence B. Raff, assignee for the benefit of creditors of Crest, Inc., appeals from an interlocutory order of the Superior Court, Chancery Division, denying the assignee's motion to dismiss the complaint of plaintiff Vonins, Inc., and from a final declaratory judgment entered in Vonins' favor.

On October 27, 1965 Crest, pursuant to N.J.S. 2A:19--1 et seq., N.J.S.A., executed an assignment of its corporate assets to Raff for the benefit of its creditors. On or about November 1, 1965, a large quantity of merchandise was forcibly removed from Crest's premises in Lakewood, and taken to New York, where the goods were confiscated and impounded pending legal proceedings in that state. On November 10, 1965, Raff sold at public auction the remainder of the assets located at Crest's premises for $8709.92. The Ocean County Court, Probate Division entered an order on November 12, 1965, confirming the sale 'free and clear of all liens, liens, if any, to attach to the proceeds * * *.' Subsequently, on December 22, 1965, Vonins instituted the present proceedings in the Superior Court, Chancery Division.

Vonins a seller of plumbing and heating parts and equipment, alleged in its complaint that on October 9, 1963 (over 2 years before the assignment for the benefit of creditors), it had entered into a written agreement with Crest, an installer of plumbing and heating apparatus. The agreement provided that Crest would assign all of its then existing installation contracts to Vonins. The latter agreed to engage Crest as its sub-contractor for furnishing labor under those installation contracts and under any others that Vonins might obtain during the period of the agreement. Vonins obligated itself to furnish Crest all 'the specified quality and quantity of materials' that Crest would need for completion of the installation contracts. Crest was to receive for its labor services 40% Of the total billings that Vonins would issue for a completed job.

Plaintiff maintained that from October 9, 1963 on, in accordance with its contract with Crest, it stored and warehoused at Crest's place of business all the latter's required supplies. It appears that the agreement between Vonins and Crest was terminated in June 1965, but that Crest had re-delivered to Vonins only a small quantity of the merchandise received under the contract. Vonins asserted that: at the time of the assignment for the benefit of creditors, a large quantity of the materials it had supplied was still stored at Crest's premises; much of this equipment was confiscated therefrom by the taking that occurred on or about November 1, 1965; and the balance thereof was sold at the assignee's sale in spite of plaintiff's demand for the return of the merchandise.

Plaintiff in the Chancery Division sought, Inter alia, a declaratory judgment determining the relative rights of plaintiff and Raff to the above noted equipment, and to the proceeds of the assignee's sale which were purportedly in Raff's possession.

I

Preliminarily, we consider Raff's appeal from the interlocutory order denying his motion to dismiss the complaint. Raff argues, as he did below, that the Chancery Division did not have subject matter jurisdiction over the assignment proceeding which had been instituted and which was then pending in the County Court. He urges that the latter court had exclusive jurisdiction and that plaintiff should have sought a 'turn-over' or reclamation order in that forum. This point is without substance.

Even if the Chancery Division lacked jurisdiction for the reason urged, defendant was not entitled to a dismissal of the complaint. At best he would have been entitled only to have the cause transferred to the County Court. See Gray v. Cholodenko, 34 N.J.Super. 190, 194, 111 A.2d 918 (App.Div.1955); R.R. 1:27D(a). Further, on this appeal we deem it proper to deal with the meritorious question. See Gray, supra, at 194; R.R. 1:27D(b). See also Nat.-Ben Franklin Fire Ins. Co. v. Camden Trust Co., 21 N.J. 16, 24, 120 A.2d 754 (1956).

Defendant also argues that the Chancery Division should have dismissed Vonins' complaint because: (1) declaratory relief cannot be given when existing alternative remedies are available; and (2) declaratory relief may be given only when there is a genuine uncertainty with respect to rights, status or other legal relations. Neither of these contentions are meritorious.

The existence of another available remedy does not preclude a judgment for declaratory relief. R.R. 4:92A. See also Nat.-Ben Franklin Fire Ins. Co. v. Camden Trust Co., supra, 21 N.J. at 23, 120 A.2d 754. Whether a court should grant declaratory relief is ordinarily a matter resting in judicial discretion. The interpretation of the 1963 Vonins-Crest agreement and the adjudication of the rights of the parties thereto in the merchandise allegedly delivered to Crest pursuant to that contract were matters well suited for declaratory relief. N.J.S. 2A:16--53, N.J.S.A., and N.J.S. 2A:16--54, N.J.S.A. Accordingly, we hold that the trial court did not abuse its discretion in determining that this proceeding was appropriate for the rendering of a declaratory judgment.

II

We next consider Raff's appeal from the final judgment. The assignee urges that the judgment entered by the trial court was against the weight of the evidence and in conflict with the applicable law.

The trial court in part based its determination for plaintiff upon the conclusion that '(s)ince the assignee for the benefit of creditors' rights in this property could be no better than the rights of the assignor, * * * determination of Crest Inc.'s claim to this property necessarily fixes Raff's rights and plaintiff's claim to the proceeds of the assignee's sale.' In so doing the court erred.

The assignee for the benefit of creditors not only has the general powers of a successor to his assignor, N.J.S. 2A:19--13, N.J.S.A., but also is vested with additional powers as the representative of the creditors. N.J.S. 2A:19--14, N.J.S.A., provides as follows:

'The assignee, in addition to the powers which he may exercise as the successor to the assignor, shall also at all times be the representative of the creditors of the assignor, and shall have the same power to set aside conveyances, and to recover or reach assets for the benefit of the creditors as a creditor would have who was the holder of a judgment and levy against the assignor and his property at the date of the assignment. All conveyances, mortgages and transfers of property, real or personal, made by the assignor, which are void or voidable as against the creditors of the assignor, shall in like manner be void or voidable as against the assignee.'

Further under the Uniform Commercial Code, N.J.S. 12A:1--101 et seq., N.J.S.A., the applicability of which is discussed infra, the assignee for the benefit of creditors has rights equal to those given to actual creditors. N.J.S. 12A:1--201(12), N.J.S.A. Raff's powers are not limited by those his assignor possessed.

Therefore the basic question here involved is whether the assignee by virtue of the Uniform Commercial Code has greater rights than plaintiff to the material delivered pursuant to the 1963 Vonins-Crest agreement. The relevant Code provision, N.J.S. 12A:2--326, N.J.S.A., in pertinent part provides:

'(1) Unless otherwise agreed, if delivered goods may be returned by the buyer even though they conform to the contract, the transaction is

(a) a 'sale on approval' if the goods are delivered primarily for use, and

(b) a 'sale or return' if the goods are delivered primarily for resale.

(2) Except as provided in subsection (3), goods held on approval are not subject to the claims of the buyer's creditors until acceptance; goods held on sale or return are subject to such claims while in the buyer's possession.

(3) Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as 'on consignment' or 'on memorandum.' However, this subsection is not applicable if the person making delivery

(a) complies with an applicable law providing for a consignor's interest or the like to be evidenced by a sign, or

(b) establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others, or

(c) complies with the filing provisions of the Chapter on Secured Transactions (Chapter 9) * * *.'

At the outset, it is to be noted that the general policy of the Code requires 'good faith not only between the parties' to a commercial transaction, 'but as against interested third parties' as well. N.J.S. 12A:2--326, N.J.S.A., Uniform Commercial Code Comment 2. Therefore, sub...

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