Opinion
No. 47/745.
03-16-1921
WOOD v. COX et al.
Charles A. Cogan and Francis J. Smith, both of Camden, for petitioner. Jonathan H. Kelsey, of Mt. Holly, for receiver.
(Syllabus by the Court.)
Petition by William E. Wood against John J. Cox and others, for the return of a chattel in the possession of the receiver of an insolvent firm. Judgment for petitioner.
Charles A. Cogan and Francis J. Smith, both of Camden, for petitioner.
Jonathan H. Kelsey, of Mt. Holly, for receiver.
WALKER, C. On June 14, 1919, Gottlieb E. Mink, trading as the G. E. Mink Company, entered into a written contract with William E. Wood and John J. Cox, partners, trading as Wood-Cox, under which Mink delivered, and in form leased, to Wood-Cox a soda machine for a period of six months, at an expressed rental of $850, of which $200 was to be paid, and was paid, upon the execution of the agreement, and the balance in sums of $100 per month, with 6 per cent. interest; with further provision that if Wood-Cox should desire to purchase the leased property, Mink agreed that upon payment by Wood-Cox of such sums as would, with previous rent, amount to the sum of $850 which, it will be seen, is the total amount of rent, Mink would execute and deliver to Wood-Cox a bill of sale for the leased property, it being agreed that no title to the property should vest in Wood-Cox as lessee under the agreement, and that if default be made by them in keeping any of the expressed covenants in the contract to be performed by them, then the lease should forthwith cease and determine, and Mink should be entitled to repossess his chattel. This was no lease in law, but a conditional bill of sale.
Singer Mfg. Co. v. Wolff Co., 70 N. J. Law, 127, 56 Atl. 147, is cited on behalf of Mink as authority to the effect that the contract here in question is a lease, and not a conditional bill of sale. It does not support the petitioner's claim. The contract before me is like that in Rapoport v. Rapoport Express Co., 90 N. J. Eq. 519, 107 Atl. 822, in which the Wolff Case was noticed and distinguished by Vice Chancellor Lane at Page 521, of 90 N. J. Eq. (107 Atl. 823). The instrument relied upon in this case as a lease is as much a conditional bill of sale as was that which was before Vice Chancellor Lane in the Rapoport Case.
Now, Mink agreed to sell this machine to Wood-Cox for $850, and in the same instrument stipulated that the same sum should be paid as rent, and upon full payment, if Wood-Cox so desired, Mink would execute and deliver to them a bill of sale for the machine. The terminology in the paper before me describing the document as a lease is a mere subterfuge, and a palpable attempt to evade the law, as was the situation in the Rapoport Case. A court in equity penetrates all disguises of form, and, disregarding the shadow, grasps the substance. Earle v. American Sugar Refining Co., 74 N. J. Eq. 751, 761, 71 Atl. 391. I hold that the instrument sub judice is a conditional bill of sale, and not a lease.
This being so, it is requirable that the conditional bill of sale should be recorded to be good against the judgment creditors of the vendee. 1 Gen. Stat. p. 891, § 191. See addendum to 2 Comp. Stat. p. 1561. This act was in force at the time this contract of sale was made; the conditional sales act. P. L. 1919, p. 461, while approved April 15, 1919, which was some two months before the making of the contract in suit did not go into effect until July 4, 1919, which was after it was made, and therefore did not operate upon it.
This contract, however, would be good against the receiver of Wood-Cox were it not for the presence of judgment creditors. See the Rapoport Case, at page 522, of 90 N. J. Eq. (107 Atl. 823), and cases cited. But there are judgment creditors before this court in this case. The bill for receiver in insolvency alleges that judgments had been recovered against Wood-Cox, and the decree pro con. established the fact against the partners. It would not establish the fact as against Mink if he chose to deny it, but he has not done so.
There is no averment in the petition that the contract is recorded, or that there are no judgment creditors, or that Wood-Cox have made default in any of the covenants in the contract by them to be performed; nor are any of these facts proved by petitioner. But in an affidavit annexed to the petition it is stated that only $300 had been paid on account, and that $550 remained due. Recovery of the machine is sought upon the theory that title resides in the vendor, that rent is in default, and that the receiver has advertised the chattel for sale.
Mink rested his case on the petition and affidavit. The receiver filed no answer, and submitted no proof; nor was he required to do so in answering an order to showcause. He chose to submit the matter on the petitioner's showing, and to make the strength of the defense the weakness of the petitioner's case. There can he no relief on facts not proved to exist, and which are not admitted. Black v. Keiley, 23 N. J. Eq. 538. So, as the case stands, it must be presumed that the contract, called in the petition a lease, but which in law is a conditional bill of sale, was not recorded, and, there being judgment creditors before the court whom the receiver represents, the prayer of the petitioner for return of the chattel must be denied, and the petition will be dismissed.
The balance due the petitioner having been proved before me on this application, the receiver will be directed to pay him a dividend thereon when distribution shall be ordered to be made to other creditors.