Watson v. Rowley

• Decision Date: 10 May 1902
• Citation: 52 A. 160,63 N.J.E. 195
• Parties: WATSON et al. v. ROWLEY et al.
• Court: New Jersey Court of Chancery

52 A. 160

63 N.J.E. 195

WATSON et al.

v. ROWLEY et al.

Court of Chancery of New Jersey.

May 10, 1902.

Bill by Austin H. Watson and others against Edward H. Rowley and others. Motion by William H. Speer, Jr., to dismiss the bill as to him. Granted.

Edward A.' Day, for complainants.

William H. Speer, J., pro se.

STEVENSON, V. C. The bill is filed to foreclose a chattel mortgage, and, if necessary, to reform the same. The defendant who on this motion objects to the sufficiency of the bill as against him is the general assignee of the mortgagors for the benefit of their creditors. His insistment is that the mortgage is shown by the bill to be void as against him because of the insufficiency of the affidavit accompanying the same.

The claim of the complainants that, in case the affidavit should be adjudged to be defective by reason of its failure to comply with the requirements of the statute, the mortgage could now be reformed by the addition of a new affidavit, does not seem to call for extended discussion. The chattel mortgage once absolutely void as against creditors or purchasers cannot be made valid without to a large extent abolishing the chattel mortgage act. The point seems to be directly ruled upon by Mr. Justice Magie, the present chancellor, speaking for the entire court of errors and appeals, in McGowan v. Baird, 53 N. J. Eq. 656, 657, 33 Atl. 1054.

The questions to be determined are whether the affidavit attached to the mortgage fails to comply with the requirements of our statute, and, if so, whether this defendant, the general assignee, belongs to a class of persons as against whom the mortgage is "absolutely void"; and, if both these questions are answered in favor of this defendant, whether the bill can be retained for any purpose as against him. The argument on both sides has proceeded upon the assumption that the mortgage was not "accompanied by an immediate delivery and followed by an actual and continued change of possession of the things mortgaged," and that, therefore, the chattel mortgage act applies to this case. The bill does not allege that there was a change of possession when the mortgage was delivered, nor does it in terms allege that there was no such change of possession. There are, however, numerous allegations in the bill which indicate strongly that no change of possession occurred. The bill claims that the mortgage fulfilled the requirements of the statute, and, in case that contention is not sustained, seeks to obtain the aid of the court in any necessary reformation of the instrument so as to make it conform with those requirements. The mortgage purports to convey a plant of machinery situate in the factory of the mortgagors, Rowley and McCreery, at Heightstown, N. J., alleged to have been in the possession of the mortgagors when the mortgage was executed on January 24, 1902. There are also allegations which indicate that the mortgagors continued their business in their factory after the mortgage was made, and the mortgage contains the usual authorization to the mortgagees, in case the sum secured should come due and remain unpaid, to enter any place where the mortgaged property might be, and to seize and sell the same. The bill further alleges that on February 7, 1902,14 days after the mortgage was executed, and only 3 days after it was recorded,—the mortgagors executed and delivered to the defendant William H. Speer, Jr., "a deed of assignment of all their property and assets, including the said mortgaged chattels, for the benefit of their creditors, and that the said Speer has taken possession of the goods and chattels covered in said mortgage and all the business and other property and assets" of the mortgagors, and now is in possession thereof. In view of these allegations, and the assumption of counsel for the complainants, in his argument, that the chattel mortgage act was applicable to this case, I think that for the purpose of this motion the bill should be construed as setting forth a mortgage of chattels which remained in the possession of the mortgagors, or at least at no time after the mortgage was made were continuously in the possession of the mortgagees. The affidavit attached to the mortgage, the jurat of which bears date January 24, 1902, is as follows: "Edward H. Rowley and Benjamin F. McCreery, the mortgagees in the foregoing mortgage named, being duly sworn, on their oath say that the true consideration of said mortgage is as follows, viz., one thousand five hundred dollars in cash this day paid to these deponents by the firm of Watson, Porter, Giles & Company; and deponents further say that there is due on said mortgage the sum of one thousand five hundred dollars in cash, besides lawful interest thereon from the date day of this mortgage and affidavit." The word "mortgagees" in this affidavit is a palpable clerical error, and must be read "mortgagors."

1. The first objection to the affidavit is that it does not show on its face that it was "made and subscribed by the holder or holders of said mortgage, or their agent or attorney." It appears affirmatively that the affidavit was not made by the holders of the mortgage, and it does not in any way appear that Messrs. Rowley and McCreery were the agents of the holders of the mortgage. The defendant insists that, where the affidavit is made by an agent of the holder, the fact that he is such agent must appear upon the face of the affidavit. The objection, in my opinion, is fatal to the sufficiency of the affidavit if the affidavit is made by the holder of the chattel mortgage, that fact should appear. A person may become the holder of a chattel mortgage by an assignment made subsequently to the execution and delivery of the mortgage. The mortgage may not be accompanied by any affidavit and yet it would seem that the holder may annex his own affidavit, and record the mortgage, with the effect that the mortgage will become in a large degree operative from the date of such record. Roe v. Meding, 53 N. J. Eq. 350, 33 Atl. 394. There are many reasons which seem to my mind to sustain the proposition that an affidavit made in fact either by the holder of a chattel mortgage or by the agent of such holder is not a compliance with the statute where the affiant does not appear in the affidavit or mortgage to be either such holder or such agent. The main objects of the affidavit are to secure good faith, to prevent fictitious liens from being placed on record, and to enable creditors and other parties interested in investigating the status of personal property to Bake inquiry into the nature of any alleged mortgage where no change of possession has occurred. The person who is qualified to make this affidavit of good faith is prescribed strictly by the statute. He may know little or nothing as to the truth of the statements which he is required to make under oath. He must satisfy himself of the truth of these statements, and upon their truthfulness may depend the validity of the mortgage. The facts alleged in the affidavit might not be provable in any litigation by the oath of the person who makes the affidavit. The witnesses who alone in such litigation could establish these facts by their testimony might all of them be disqualified from making the affidavit necessary to validate the mortgage, because none of them was the bolder or the agent of the holder of the mortgage. It is thus not only necessary that a proper affidavit should be made in regard to certain facts, but it is equally necessary that such affidavit should be made by an affiant who is particularly described by his special relations to the mortgagor and the mortgaged property. The mortgage might be void though accompanied by a dozen affidavits made by credible witnesses who had knowledge of all the facts. The mortgage would be valid though accompanied only by the affidavit of the holder thereof or his agent, notwithstanding that such holder or agent had no knowledge whatever of the most important matters alleged in such affidavit. These propositions are, I think, fully sustained by the decision of the court of errors in Fletcher v. Bonnet, 51 N. J. Eq. 610, 28 Atl. 601. In the same case in this court (Bonnet v. Manufacturing Co., 51 N. J. Eq. 162, 165, 26 Atl. 685, 686) Vice Chancellor Pitney held that, inasmuch as neither the mortgage nor the affidavit showed that the affiant was "the agent or attorney of the several beneficiaries under the instrument in question other than himself, * * * it was very properly conceded by counsel for the defendant that the affidavit could not be maintained on that ground." This ruling was not affected by the reversal of the decision in the higher court. Where an affidavit made in pursuance of a statute derives its force not from the fact that the affiant as a witness testifies to facts within his knowledge, but from some special capacity or personal status of the affiant, who may speak from information or belief only, it would seem that the existence of such capacity or personal status should appear in the affidavit in order to give it validity, and cannot afterwards be supplied by evidence aliunde. If additional proof of this essential fact may be supplied, why not also additional proof of any of the other essential facts which the affiant must set...