Summary
In Cooper v. Philadelphia Worsted Company, 68 N. J. Eq. 622, 60 Atl. 352, it is determined that in cases of this nature it is the law of the situs of the property at the time the contract is made which must control.
Summary of this case from Lane v. J. E. Roach's Banda Mexicana Co.Opinion
04-09-1904
COOPER et al. v. PHILADELPHIA WORSTED CO.
Beldon & Learning, for petitioner. Thomas E. French, for Harding, Whitman & Co.
Suit by N. Lewis Cooper, executor of Daniel Lees, deceased, and others, against the Philadelphia Worsted Company. On petition by N. Lewis Cooper, executor, for an order directing the receiver of the insolvent defendant to turn over to him, as executor, property in the possession of defendant at the time of the receiver's appointment. Decree postponed.
On October 22, 1903, George W. Jessup was appointed by this court receiver of the Philadelphia Worsted Company, an insolvent corporation of this state, and on that day the receiver qualified and took possession of the property of the company, including machinery located at Cooperspoint, in Camden county. Certain of this machinery had on November 24, 1899, been delivered by Daniel Lees, of Lennie, Pa., to the company at Lennie, Delaware county, Pa., to be used in the mill of the company located at that place. This machinery continued to be used in the mill of the company at Lennie until April 12, 1901, at which time the company established its plant at Cooperspoint, in the countyof Camden. On the same day it removed a portion of this machinery to Camden; on April 1st, another portion; and on May 10, 1901, it removed the remaining portion of said machinery to Cooperspoint, and since that date has used the machinery there. Whether Mr. Lees knew of this shipment from Lennie to Cooperspoint does not appear. A portion of the purchase price remained unpaid. When the receiver was appointed, a cause was pending against the Philadelphia Worsted Company in the circuit court of Camden county, brought by Harding, Whitman & Co., in which action, no plea having been filed, the plaintiffs entered judgment against the Worsted Company on October 26, 1903, for the sum of $2,155.91, and on the 30th day of October an execution was issued on said judgment, and a levy was made upon this machinery by the sheriff of the county of Camden. N. Lewis Cooper, the executor of Daniel Lees, files this petition, praying this court to direct the receiver to turn over the property to him. An answer to the petition is filed on behalf of Harding, Whitman & Co., a judgment creditor.
Beldon & Learning, for petitioner.
Thomas E. French, for Harding, Whitman & Co.
REED, V. C. (after stating the facts). The question involved has been submitted to me, waiving any question of jurisdiction.
The first point made by the judgment creditor is that the instrument under which the machinery was delivered to the now insolvent company is invalid against the judgment creditor, having no knowledge of its existence at the time of the entry of the judgment, because the instrument was not recorded in Camden county until October 27, 1903, a day after the judgment was entered. The validity of the instrument as against the judgment creditor is put upon the language of sections 21, 54, and 71 of the revised act of 1898 (P. L. pp. 677, 690, 699) respecting conveyances. The instrument under which the machinery was transferred from Lees to the Philadelphia Worsted Company, although styled a "lease," seems to come within the class of conditional sales mentioned in the statute. It is claimed on behalf of the petitioner that this particular transaction is not within the class provided for by the statute. It is insisted that it falls within the ruling in the case of Woolley v. Geneva Wagon Company, 59 N. J. Law, 278, 35 Atl. 789. In that case there was a conditional sale of goods in the city of New York by a vendor to a vendee, both residing in New York. It was ruled that inasmuch as the statute provided that the sale then in mind should be recorded in the office of the county clerk in the county where the buyer, if a resident of the state, should reside, or, if the buyer was a nonresident, then in the office of the county clerk where the property should be at the time of the execution of the instrument, it followed that if the buyer was a nonresident, and the property was not in this state at the time of the execution of the conditional sale, then the provision of the recording of the instrument was inapplicable. It was held, therefore, that the New York contract was unaffected by our statute, and that the vendor retained title against a person who had attached a property in this state, where the New York contract was unrecorded. The same doctrine was announced in the case of Parr v. Brady, 37 N. J. Law. 201, where a similar rule was applied to the provisions of the chattel mortgage act. The counsel for the judgment creditor insists that the doctrine of this case has been exploded by the decisions of the Supreme Court, afterwards affirmed by the Court of Errors, in Knowles Loomworks v. Vacher, 57 N. J. Law, 490, 31 Atl. 306, 33 L. R. A. 305; same case on appeal, 59 N. J. Law, 586, 39 Atl. 1114. This, however, does not seem to be so. The rulings were upon distinct conditions of fact. In the latter case the purchaser was a resident of this state, being a corporation of this state, with its works located at Paterson. In the language of the court, the contract was made in New York, but the property was to be delivered, and was delivered, to be held by the purchaser in this state. The point of difference between the two cases is that in one the buyer was, and in the other was not, a resident of this state. Now, the purchaser in the present case was a corporation of this state, and the case of Knowles Loomworks v. Vacher. supra, is authoritative that a domestic corporation is a resident of this state, within the contemplation of the statute. It distinctly holds that, when a domestic corporation is a purchaser under a contract that the title shall remain in the vendor until payment of the consideration, it is the duty of the vendor to record the contract within this state. Whether the contract should be recorded in the county where the principal office of the corporation is, or in the county where its works are located, or in both, need not be decided; but that it can be and must be recorded in the state, to protect it against a judgment creditor without notice of its existence, is settled. Our statute, therefore, being applicable to the contract respecting this property, when it is brought within this state, the law of the situs of the property at the time of the entry of the judgment must control the right of the judgment creditor, as against the vendor or lessor of the property. This law seems to be entirely settled by the cases of Marvin Safe Company v. Norton, 48 N. J. Law, 410, 7 Atl. 418, 57 Am. Rep. 566, and Knowles Loomworks v. Vacher, supra. As against the executor of Mr. Lees, a judgment creditor has a superior right, to the extent of his judgment Minor on Conflict of Laws, § 130.
It is, again, insisted that the petitioner does not stand in the attitude of a judgment creditor, for the reason that his judgmentwas entered after the appointment and qualification of the receiver. This point does not seem to be tenable. The rule is that no person can bring an action against a corporation after a receiver has been appointed without the consent of the court. But as to actions pending at the time of the appointment of the receiver, they can go on to judgment even without making the receiver a party. It is the privilege of the receiver to be substituted for the corporation, if he so desires, and makes application for that purpose. In Willink v. Morris Canal & Banking Co., 4 N. J. Eq. 377, there was a decree pro confesso against a corporation in a foreclosure suit; and thereafter a receiver was appointed, and the suit proceeded against the corporation. Held, that the suit did not abate by reason of the appointment of the receiver, and, if the receiver had applied to be made defendant, be would have been admitted. The general rule is stated by Mr. Justice Depue in delivering the opinion in Ennis v. Eden Paper Mills Co. (N. J. Err. & App.) 48 Atl. 610. This is the general rule laid down in the books, which controls unless there is an injunction restraining the suit, or a legislative provision to the contrary. There are several provisions in our corporation act in regard to the substitution of a receiver as complainant, but nothing which changes the general rule with respect to pending actions like the present. The receiver does not appear in this application by answer or otherwise. I think his appearance should be entered by filing an answer either submitting himself to the judgment of the court, or setting up any claim to the possession of the machinery to which he may think himself entitled.
I will hold the matter until he files such an answer.