Wimppheimer v. Perrine

• Decision Date: 10 December 1900
• Parties: WIMPPHEIMER et al. v. PERRINE et al.
• Court: New Jersey Court of Chancery

47 A. 769

61 N.J.B. 126

WIMPPHEIMER et al.

v. PERRINE et al.

Court of Chancery of New Jersey.

Dec. 10, 1900.

Creditors' bill by Adolph Wimpfheimer and others against John J. Perrine and others. Decree for complainants.

James E. Howell, for complainants. E. M. Colie and William R. Howe, for defendants.

Lindslay. Thomas A. Davis, for defendant assignee of Perrine.

EMERY, V. C. Complainants are judgment and execution creditors of the defendant Perrine, and file their bill and supplemental bill to establish, as creditors under four executions, a lien upon personal property in the possession of the defendant Stagg, as assignee of Perrine, under the assignment act for the benefit of creditors. The assignment was made previous to the issuing of execution on any of complainants' judgments, and previous to the recovery of all of the four judgments, except one for $107, which was recovered on the same day the assignment was made. Previous to the execution of the assignment, defendant Perrine had executed and delivered to the defendants Lindslay three chattel mortgages on the tangible personal property assigned, the dates and amounts of the mortgages being, respectively, October 17, 1896, for $3,000; February 10, 1898, for $1,200; and February 14, 1898, for $8,500. Neither of these mortgages was recorded until March 25, 1898, the day of the execution of the assignment. Subsequent to the filing of the bill, the mortgaged property was sold by consent of the parties, the liens being transferred to the proceeds, and the assignee defendant now holds the proceeds of sale, about $4,700 (being less than the amount due on the mortgages to the defendants Lindslay), subject to the order of the court. All of the debts upon which complainants' judgments were recovered were incurred by the debtor previous to the recording of the mortgages, some of the claims, however, being debts due to others than the complainants, to whom they were assigned before recovery of judgment thereon, and one of the four judgments was assigned to the complainants after recovery. Some of the claims proved under the assignment are upon debts incurred by the insolvent debtor before the recording of the mortgage. It is not disputed that, but for the assignment and its effect on their rights, the complainants (at least as to all of their judgments based on their own claims against the mortgagors) would be entitled to have the mortgages declared void under the chattel mortgage act (2 Gen. St. p. 2113, § 4 et seq.), because of the failure to record immediately. Roe v. Meding (Err. & App.; 1895) 53 N. J. Eq. 350, 33 Atl. 394.

The first question is whether, in view of the assignment, the complainants have the right to set aside the mortgages, or whether this right passed to the assignee under this assignment, to the exclusion of subsequent execution creditors. Complainants claim that the right does not pass to the assignee, relying on the decision in Shaw v. Glen, 37 N. J. Eq. 32 (Chancellor Runyon, 1883). It was held in this case that such assignee could not attack a chattel mortgage for failure to record it as required. In the previous decision in Pillsbury v. Kingon (Err. & App.; 1880) 33 N. J. Eq. 287, it was held that an assignee could attack a conveyance by the assignor, if fraudulent against creditors; but Chancellor Runyon, in Shaw v. Glen, held that the principle settled in Pillsbury v. Kingon did not apply to conveyances unaffected by fraud, and that in such cases the assignee was bound by the equities to which the property assigned was liable when it came to his hands from the assignor. In the subsequent case in chancery of Receiver of Graham Button Co. v. Spielmann (1892) 50 N. J. Eq. 120, 24 Atl. 571, Vice Chancellor Van Fleet held that a receiver of an insolvent corporation, as representing creditors, could set aside a chattel mortgage void for failure to comply with the registry laws. He considered (see pages 127, 128, 50 N. J. Eq., and page 574, 24 Atl.) that the principle applied in Pillsbury v. Kingon was the rule that a deed void as against creditors is void also against those who represent creditors, and that the assignee by the statute becomes the representative of the creditors of the assignor, and stands invested with their rights, and may avoid any instrument which creditors might avoid. Upon this view of Pillsbury v. Kingon, the vice chancellor declared his opinion to be that the rule therein declared against fraudulent conveyances was also to be applied to conveyances declared void by statute against creditors for failure to record, and he also stated that the rule applied in Shaw v. Glen could not be reconciled with this view of the effect of decision in Pillsbury v. Kingon. This decision in Receiver of Graham Button Co. v. Spielmann in 1893 was affirmed on appeal, for the reasons given by the vice chancellor. 50 N. J. Eq. 796, 24 Atl. 1033. In a later case in the supreme court (Loom Works v. Vacher [1895] 57 N. J. Law, 490, 31 Atl. 306, 33 L. R. A. 305), a question arose on the statute which avoided unrecorded conditional sales of personal property, "as against subsequent purchasers and mortgagees in good faith," and the question was whether a subsequent mortgagee, to secure a pre-existing debt, was a mortgagee in good faith under the statute. It was held that he was such mortgagee in good faith. Mr. Justice Van Syckel, who delivered the opinion of the court, considered the question of the right of an assignee to attack an unrecorded mortgage as having a bearing on the question in hand, and in the course of his decision (see pages 468, 499, 57 N. J. Law, and page 309, 31 Atl.) treated the decision in Shaw v. Glen as not overruled by either Pillsbury v. Kingon or Receiver of Graham Button Co. v. Spielmann, notwithstanding the opinion of Vice Chancellor Van Fleet, and he approved the principle declared in Shaw v. Glen, distinguishing between the effect of involuntary and voluntary assignments in cases where there was no fraud. The court of errors and appeals affirmed the judgment in the Knowles Loom Works Case on writ of error, for the reasons given by the supreme court. Bruce v. Pearsall (1896) 59 N. J. Law, 586, 39 Atl. 1113.

The question which I have now to decide is, what is the status and the binding force of the decision in Shaw v. Glen, made expressly upon the point now involved, in view of the subsequent comments on that decision? In reaching a conclusion on this point, it must be observed that in neither of the subsequent cases was the question directly involved of the right of an assignee, as representing creditors, to attack a mortgage void against creditors under the registry laws. The subsequent expressions of disapproval of the decision in Shaw v. Glen, made by the judges of lower or co-ordinate tribunals, in cases which did not expressly require a ruling upon it, cannot, therefore, be taken as affecting its binding authority. Nor did the affirmance by the appellate court of the judgment and decree of the lower tribunals in the subsequent cases have the effect of extending the binding authority of the opinions in the lower tribunals to the points which were not directly Involved in the decision of the case either below or on appeal. As to these points not involved, the final appellate court must, notwithstanding the general affirmance of a judgment or decree for the reasons given below, necessarily retain the power to decide such new points when they come up directly for decision and review. I think, further, that by the comments of Mr. Justice Van Syckel, in the later case, upon Shaw v. Glen, and by the adoption of his opinion by the court of errors, as the reasons for affirming the judgment, the court of errors and appeals has indicated that it took this view of the effect of the Receiver of Graham Button Co. v. Spielmann Case upon Shaw v. Glen, and considers the question of the correctness of the latter decision as open for review when directly involved on appeal. If this view as to the...