Summary
In Horowitz v. Weidner, 31 Atl. Rep. 771, the affidavit stated "there is nothing now due and the utmost that may become due is $2,000.
Summary of this case from Sherman v. Union County, c., Co.Opinion
04-22-1895
HOROWITZ et al. v. WEIDNER et al.
Abner Kalisch and Mr. Hammell, for complainants. George M. Keasbey, for landlord. F. M. Olds, for judgment creditors.
(Syllabus by the Court.)
Bill by Jacob Horowitz and another against Emile Bourquin, George Weidner, and others to foreclose a chattel mortgage. Heard on pleading, and proofs taken in open court. Decree for complainants.
This is a bill by mortgagees to foreclose a chattel mortgage in which the defendants are the mortgagor, Bourquin, the landlord of the premises upon which they were situate, and certain judgment creditors of the mortgagor. The Instrument bears date June 14, 1893, and the condition is that Bourquin should "perform and keep the agreement, of even date herewith, entered into by me [Bourquin] with the said party of the second part [Horowitz & Hershfield], for the manufacture by me for them of gold watch cases, and save harmless and indemnify the said party of the second part from loss and damage sustained by them by reason of the nonperformance thereof by me." The affidavit made by one of the complainants (Hershfield) says that the true consideration of said mortgage is as follows: "To secure to deponent and his partner, the said Jacob Horowitz, the due and proper performance of the agreement, of even date therewith, referred to in the said mortgage, and to indemnify the said Jacob Horowitz and deponent to the extent of two thousand dollars from all loss occasioned to and suffered by the said Jacob Horowitz and deponent by reason of the nonperformance or Improper performance of the said agreement by the said Emile Bourquin." The mortgage was executed and recorded on the 14th of June, 1893. The agreement therein referred to was also executed by the parties on the same day. By its terms, Bourquin, party of the first part, agreed to "manufacture and make with all proper speed, in a good, proper, and workmanlike manner, and of the proper quality of gold, such number and kind of watch cases as may be from time to time required by order in writing of the party of the second part [Horowitz & Hershfield], and at the prices to be agreed upon at the time of the receipt of the order; all watch cases so made to be delivered by the party of the first part at the business premises of the party of the second part, situate in said city of New York, and, until actually delivered to and received by them, to be at the risk in all things of the said party of the first part." The party of the second part (Horowitz & Hershfield) agreed that they would procure and furnish, at their own cost, all the brick gold necessary for the proper manufacture by Bourquin of the said watch cases, and, in the event of an assay being made, allow half a carat off the quality of the gold manufactured and made up into watch cases aforesaid. Under that agreement, complainants delivered to Bourquin on June 14th two gold bars, of the value of $1,092.32, and silver, for alloy, of the value of $73. and on July 25th a gold bar of the value of $422.94; also cash at various times, and imperfect watch cases returned, amounting, in the aggregate, on September 8, 1893, to $2,008.49. They received from him watch cases manufactured to the value of $1,202.37, leaving a balance due of $806.12. It appears that the total value of the gold and silver delivered by complainants to Bourquin was about $1,588, and that the finished goods which they received from him, amounting in value to $1,202.37, had a melting value of about $900, and that the cash advanced was for the purpose of enabling Bourquin to pay his workmen who were working on these very cases. Bourquin's factory was closed by the sheriff of Essex county by virtue of an attachment issued against him about the 21st of September,1893. The chattels were sold by a receiver appointed by this court, and the contest now is over the proceeds of the sale.
Abner Kalisch and Mr. Hammell, for complainants.
George M. Keasbey, for landlord. F. M. Olds, for judgment creditors.
PITNEY, V. C. (after stating the facts). The principal question raised at this stage of the case is as to the sufficiency of the affidavit annexed to the complainants' mortgage. The criticism made upon it is that it does not answer the requisition of section 4 of the chattel mortgage act (Supp. Revision, p. 491), in that it does not state the "consideration" of the mortgage, and, as nearly as possible, "the amount due and to grow due thereon." The language of the last part of section 4 is that the affidavit must state "the consideration of said mortgage, and, as nearly as possible, the amount due and to grow due thereon." With regard to the amount due, the affidavit does not state that anything was due, and in this respect it was strictly true; for, although nearly $1,100 worth of gold and silver was delivered on that day by the complainants to the mortgagor, yet it could not be truthfully said that anything was due or would grow due from Bourquin to complainants until he made default in his agreement to work it up into watch cases, and return the product to the complainants. The affidavit does state that the Indemnity is to be to the extent of $2,000. For that limit there is no warrant, either in the agreement itself or in the body of the mortgage; and, so far as those instruments show, the security of the mortgage was unlimited, and included all losses which the mortgagees might sustain in the premises. The limit of $2,000, therefore, was voluntarily imposed by the mortgagees. The affidavit says, in effect, that although by the body of the mortgage and the agreement there is no limit, yet a limit is now fixed by this affidavit at $2,000, in obedience to the language of the statute that the affidavit shall state as nearly as possible the amount due and to grow due thereon. Or, more briefly: "There is nothing now due, and the utmost that may become due is $2,000." It seems to me that the affidavit in that respect is sufficient.
The serious question is as to whether it states the contract between the parties with sufficient fullness to show the "consideration," In fulfillment of the requisition of the act in that behalf. It is manifest that the draftsman of the act, in preparing this part of it, had in mind only the ordinary case of a mortgage to secure a simple money demand directly from the mortgagor to the mortgagee. It follows that it is quite difficult, if not Impossible, to literally comply with the language of the requisition for the affidavit of consideration, and of the amount due and to grow due, in the few, yet important, cases occurring in practice where the exigencies of legitimate business require a mortgage upon chattels to secure the performance of a contract to do something other than the payment of money, or a contingent or collateral liability, or as a simple indemnity. Yet such difficulty has not been sufficient to prevent the use of such securities for such purposes, and the sanction of their validity as such by bench and bar. In fact, they have been put upon the same basis as mortgages of real estate. Doughten v. Gray, 10 N. J. Eq. 323; Chapman v. Hunt, 13 N. J. Eq. 370; Tompkins v. Crosby, 13 N. J. Law J. 166; Id. (N. J. Ch.) 19 Atl. 720. In cases of this class the affidavit must conform as nearly as practicable to the letter, and must fulfill the spirit of the act Vice Chancellor Van Fleet In Ehler v. Turner, 35 N. J. Eq. 68, at page 09, says: "The legislature, I think, meant to compel the mortgagee to commit himself to a statement or disclosure of his debt or claim, when he made his mortgage a matter of public record, sufficiently precise and explicit to afford the creditors of the mortgagor, in case fraud was suspected, a fair opportunity to ascertain, by legal investigation or otherwise, whether the mortgage was an honest security or a mere fraudulent cover." That language was used in a case of a mortgage to secure a simple money demand, and so is not literally applicable here. My paraphrase of it, as applied to a case of this kind, would be that the legislature intended to require a disclosure, under oath, of the actual transaction between the parties, Including the object and purpose of the instrument, with sufficient precision to enable the creditors of the mortgagor to have a reasonable opportunity to ascertain its true character. In this instance, as usual, that Information is found in the condition of the mortgage, which discloses "an agreement of even date, entered Into" between the parties, "for the manufacture by the mortgagor for the mortgagees of gold watch cases"; and the object is stated to be "to indemnify and save harmless the mortgagees from loss and damage sustained by them by reason of the nonperformance thereof by the mortgagor." Is this sufficient? Or is it necessary to set out the substance of the agreement more fully, so as, if practicable, to show how and wherein the mortgagor might fail to perform, and how the mortgagees might be injured by such nonperformance? If all that is necessary be to state sufficient data to enable the creditor to successfully prosecute inquiries on this subject, then I should say the affidavit is sufficient, for it gives the names of the parties and the date of the agreement, and refers, as it may rightfully do (Fletcher v. Bonnet, 51 N. J. Eq. 615, 28 Atl. 601), to the body of the mortgage for further particulars, and there the residences of the parties are given. A creditor had but to call upon complainants, and ask to see the agreement, and to be Informed of the present condition of affairs under it, in order to obtain all requisite information.
That seems to me to be sufficient. If the agreement had been set out in full, as a schedule to the mortgage, the creditor would still have been obliged to resort to a personal inquiry of the mortgagees if he wished to learn the state of the accounts between the parties; so that I do not see how he would have been materially benefited by its perusal as a part of the mortgage. Moreover, it seems to me that the language used in the condition of the mortgage indicates the nature of the risk against which the mortgagees required indemnity, viz. the nonperformance of a contract of bailment, — "locatio operis faciendi." Jones, Bailm. 36; Story, Bailm. §§ 422, 423. The mortgagor agreed to manufacture gold watch cases upon the order of the mortgagees. Now, the only serious risk the latter could, in the ordinary course of business, incur in such a transaction, would be the loss of any material furnished by them to the manufacturer. The force of the word "manufacture" is simply and no more than this: "To make up by hand [original definition] or by machinery [derivative definition] any raw material Into a form fit for use." It does not include the Idea that the manufacturer shall furnish the raw material. That Is, strictly speaking, a mercantile sale, though in common parlance we speak of a man who furnishes the material and works it up as a manufacture. In fact, he is both a merchant and a manufacturer. In the case in hand it seems to me that the language used in the affidavit indicated plainly enough that the mortgagees expected to furnish the material to be manufactured by the mortgagor into gold watch cases. If so, then the nature of the risk indemnified against was sufficiently stated. The case is free from the least appearance of an intention to conceal or defraud, and to hold the affidavit in this case, taken, as it should be, in connection with the statement in the body of the mortgage, to be Insufficient, would, in my judgment, be placing a useless and unwarranted clog upon the use of these instruments by business men. In fact, now that we have become accustomed to their use under provisions for their record as a notice to others, it is a little difficult to perceive why any distinction should be made in the law between them and mortgages of land. Upon the whole, and for these reasons, I conclude the affidavit is sufficient.
The remaining question is as to the extent of the complainants' demand. It was suggested that the advance of $375 in cash to Bourquin to pay his workmen was not an item covered by the contract, and hence should be eliminated. I do not perceive on what ground this could be done, and, if it be done, I do not see that it will help the defendants. The total value of the precious metals delivered to Bourquin was $1,588, and the melting value of the watch cases returned by him was about $900, leaving nearly $700 due on that narrow construction of the contract, and the fund in court is only $721.28. It follows that, if complainants' claim is reduced to the actual difference in value between the materials delivered and those returned, it will amount, with Interest and costs, to sufficient to absorb the whole fund.
I will advise a decree that the complainants are entitled to the fund.