Opinion
08-19-1897
McINNES v. McINNES BRICK MANUF'G CO. et al.
Lewis Starr, for complainant. A. H. Gangewer, for defendants.
(Syllabus by the Court.)
Bill by Rebecca McInnes against the McInnes Brick Manufacturing Company and others to foreclose a mortgage, in which a cross bill was filed by defendant Alfred H. Faber. Heard on bill, answer, cross bill, etc.
The bill is filed to foreclose a mortgage for $3,000, dated May 2, 1890, recorded May 5, 1890, payable in five years from date, with interest at 5 per cent., made by Smith W. Clark and wife to Amanda and Ann S. Buzby, assigned June 25, 1896, to Rebecca McInnes, complainant. The mortgaged premises are situate in Burlington county, and consist of 60 82/100 acres of land on Rancocus creek. Theproperty was conveyed, subject to this mortgage, to the McInnes Brick Manufacturing Company, one of the defendants, November 15, 1890, by Hugh Mclnnes and Charles F. Van Horn, who had foreclosed from the mortgagor. On November 22, 1892, the Mclnnes Brick Manufacturing Company, which will hereafter be called the "Company," made two mortgages, one to the complainant, Rebecca Mclnnes, to secure the payment of $31,000 in three years, with lawful interest, the other to Maggie M. Van Horn, to secure the payment of $3,476.68, with like interest in the same time. This latter mortgage has been assigned to the defendant Faber. These two mortgages are expressed to be given upon the mortgaged lands, and the "engine, boilers, machinery, shafting, etc., and personal property now or hereafter to be put therein, or attached to the said premises," and each mortgage contained a clause, hereinafter quoted, making them concurrent liens upon the property mortgaged. Both mortgages were recorded as real-estate mortgages on January 19, 1893, and the Van Horn mortgage as a chattel mortgage on July 16, 1896. The complainant alleges that on the Van Horn mortgage interest has been paid to November 22, 1895, but on the complainant's mortgage no interest has been paid; and the complainant insists that, by force of the above concurrent clause, the interest on her mortgage should be first paid out of the proceeds of the sale up to the same date as it has been paid on the Van Horn or Faber mortgage, before distribution of any proceeds of sale under the concurrent clause. On January 6, 1894, the Company made another mortgage to the complainant, to secure the payment of $11,000 in three years, with interest, upon the mortgaged premises and personal property, which was recorded on January 22, 1894, as a real-estate mortgage. On May 28. 1895, the Van Horn mortgage was assigned, as stated, to the defendant Alfred H. Faber.
The defendants Mr. and Mrs. Van Horn and Mr. Faber answer the bill jointly. They deny that Charles F. Van Horn claims to have any interest in either the mortgaged premises or the mortgages thereon, and they state that the defendant Maggie Van Horn has assigned her interest in her mortgage to the defendant Faber. After these statements, the answer is still so phrased that all three of these defendants continue to make answer. By the statements of their answer they deny that the whole principal money ($3,000) remains due on the first, or Buzby, mortgage, and say that $1,000 was paid on account of that mortgage before it was purchased by the complainant. They admit the indebtedness to the complainant on the second, or $31,000, mortgage, as to the principal, but they deny that no interest has been paid, and say that interest is due, not from the date of the mortgage, November 22, 1892, but only from a year thereafter, November 22, 1893. They deny that interest has been paid on the Van Horn-Faber mortgage up to November 22, 1895, and say it has been paid only to May 22, 1895, and not since that date. They also deny that the complainant is entitled to have the interest on her concurrent mortgage paid up to the date that it has been paid on the Van Horn-Faber concurrent mortgage. The defendants admit the making of the complainant's $11,000 mortgage, and its record and nonpayment. They allege that on August 6, 1896, the complainant recovered a judgment against the Company for $4,080.03, levied on a portion of the property conveyed by the Faber mortgage, consisting of raw material and manufactured bricks, and sundry other articles of personal property, which was purchased by the complainant, and removed by her, which the defendants say should be accounted for by her, and be charged as if a payment on account of her $31,000 mortgage. They join in a prayer that the real and personal property be sold, but they pray, also, that the complainant be charged with the value of the property covered by the mortgage, sold under the judgment recovered by her, and that the moneys realized by the sale, and charged against the complainant, be distributed as follows: First. To pay cost and charges of this suit. Second. To pay $2,000 balance due on complainant's first mortgage, with interest. Third. Pro rata to pay the concurrent mortgages. Fourth. To pay complainant's $11,000 mortgage, with interest. The defendant Alfred H. Faber subsequently filed a cross bill, making the complainant sole defendant. In this cross bill the defendant Faber alleges that he demanded payment of his mortgage on June 20, 1896; that on an unnamed day in that month the complainant and her husband (who is president of the defendant Company) came to see him (Faber) at his office, and told him that, if he would not accept less than the principal and interest due on his mortgage, they would purchase the first mortgage, and foreclose, and thus his mortgage would be devested; that they afterwards did so purchase the first mortgage, paying only $2,000 therefor, and immediately proceeded to foreclose in this case. He also states the entry of the judgment by the complainant to have been without his knowledge; that execution was issued, and the sheriff told to levy and sell a portion of the property known by the complainant to be covered by the lien of the Faber mortgage; that notices of the sale were not posted in the neighborhood of the Company's premises; that on August 8, 1896, the sheriff sold a considerable part of the property covered by the Faber mortgage to the complainant for $1,290 (naming the items); that other property was purchased by the complainant, and removed by her, for which she should account; that on July 1, 1896, the Company stopped work, and Faber charges that this was in pursuance of a scheme to obtain possession of the plant for a small sum, without paying the defendant's mortgage; that the Company was not indebted at the time, save to the complainant and to him (Faber).He states the remarks of "a man who was working on the premises" that the husband of the complainant had said the manufacture of bricks "would be again proceeded with as soon as they got things in their own hands." He further charges that the whole transaction of the complainant is a fraudulent scheme for acquiring the land and premises, goods, etc., without paying his mortgage, and that the sale under the judgment was made to render the plant valueless when sold under the foreclosure suit; that, because the sale was not properly advertised, it brought a grossly inadequate price. Answer is prayed under oath, and that the complainant, Rebecca McInnes, may be decreed to have purchased the first or Buzby mortgage, obtained the judgment, and made sale of the goods, etc., fraudulently as against Faber, and may be decreed to be a trustee for Faber, and to deliver the goods up to him in part satisfaction of his mortgage, and that she may be decreed to pay his mortgage, with interest, and be enjoined from prosecuting this suit, and from disposing of the goods, etc., she purchased at the sheriff's sale.
In accordance with the invitation of Mr. Faber, Mrs. McInnes, the complainant in the original bill and sole defendant in the cross bill, has filed her answer under oath. She admits calling on Mr. Faber, but denies she made the statements alleged in the cross bill. She answers that she recovered her judgment against the Company in good faith for money loaned to the Company. She admits the sale, but denies that it was insufficiently advertised, and states that a large number of notices of sale were posted, some of them on or in immediate vicinity of the premises of the Company. She admits she bought the goods named for $1,290, denies they were worth $5,000, and says the sale came off in the presence of a number of brick manufacturers, who would have bid on the property if the price bid by her had been inadequate. She denies that she has removed the goods, except $4.20 worth of bricks. She denies specifically and generally every allegation of purposed or acted fraud on the defendant Faber, and disputes the equity of the cross bill, claiming the same benefit as if she had demurred thereto. As to the purpose and occasion of the purchase of the Buzby mortgage, she answers that the whole amount ($3,000) was due. The Buzbys wanted their money, and threatened to foreclose. The Company could not pay it. That Hugh McInnes, the husband of the complainant, and his family, owned all the stock of the Company, except five shares owned by Van Horn. That the Company also owed McInnes over $7,000 for money loaned. That the $1,000 was advanced to the Buzbys, not out of the Company funds, but by Mclnnes, out of his private funds, upon a previous understanding with the president of the Company that he (McInnes) should be protected and subrogated to the extent of the $1,000 right of the Buzby mortgagees under their mortgage. The complainant subsequently received an assignment of the Buzby mortgage, upon her agreement to hold it to the extent of $1,000, for her husband's benefit. She declares that the defendant threatened to foreclose his mortgage unless consent was given that it should precede the concurrent mortgage. That the purchase of the Buzby mortgage was made, and its foreclosure begun, to secure the payment of $1,000, advanced at the Company's request, and to make a perfect title to the property, and get a better price for it, for the benefit of all interested. She states that on July 2, 1896 (which was more than a month before she entered judgment), Faber entered judgment against the Company, and levied on its property and book accounts, and that, because of this proceeding, the Company could not carry on its business, and stopped on that day. That afterwards, on July 21, 1896, Faber issued an attachment in Philadelphia against the Company, and seized its property, book accounts, and bank balance. That thereupon, to protect herself, the complainant recovered and entered her judgment, and caused the goods and chattels to be sold by the sheriff for as fair and adequate price as they would bring at a public sale for cash. She denies that any of the goods sold were covered by the lien of the mortgages. She charges that the Faber mortgage was not proved and recorded as a chattel mortgage when executed. That the mortgagor, the Company, retained possession of the goods until after the sheriff sold them in August, 1896, and that the complainant is a creditor whose indebtedness accrued prior to July, 1896, so that the Faber mortgage is, as a chattel mortgage, void as to her. She therefore claims that she has acquired title to the goods bought at sheriff's sale free from any lien under the Faber mortgage, and that she is not required to account.
Lewis Starr, for complainant.
A. H. Gangewer, for defendants.
GREY, V. C. (after stating the facts). The points raised and discussed in this case are: First. Should the payment of $1,000, receipted on the Buzby mortgage, made out of his own funds by Hugh McInnes, be credited on that mortgage for the benefit of the Company? Second. Should the $31,000, concurrent mortgage of the complainant, be allowed out of the proceeds of sale, before payment of both the concurrent mortgages, a special credit of interest up to the date to which interest has been voluntarily paid by the Company on the other concurrent mortgage held by Faber? Third. Has the defendant Faber, complainant in the cross bill, sustained his claim that the complainant, Rebecca McInnes, acted fraudulently in procuring and foreclosing the Buzby mortgage, and entering her judgment and making sale of the Company's property? Fourth. Is the defendant Faber entitled to any relief against the complainant under his claim that his mortgage has been proven and recorded as a chattel mortgage?
First. As to the payment of the $1,000 on the Buzby mortgage. The Company is shown to have been in extreme financial distress at the time of this payment. Mr. McInnes paid this money to the mortgagees out of his individual funds when the Buzbys had demanded payment, in consequence of a conversation with the president of the Company, at which it was stated by McInnes that the Company had no money, "and that I would have to advance it out of my personal funds, and have it assigned to me; and I said to him, 'You had better give me a form of receipt that I could enter upon the mortgage, so as to show it is my transaction.'" McInnes paid the money upon this agreement, the Company contributing nothing. The receipt specifies that it was paid by McInnes. The Buzbys accepted it on this understanding, and signed the receipts, showing the money was paid by McInnes. That the $1,000 was paid by him for the purpose of preventing a foreclosure, upon the assurances given him by the executive officers of the mortgagor Company that he should be protected by an assignment of the mortgage, or holding of it to the extent of the payment for his use, and this, also, with the assent of the mortgagee, is sufficiently proven. The subsequent assignment by the Buzbys to Mrs. Mclnnes, on payment of the balance due, was a ratification of the original arrangement. To either of these payments neither the mortgagor, the defendant Faber, nor the antecedent holder of his mortgage, Mrs. Van Horn, contributed anything; but Faber now claims that he should have the full benefit of the payment, and that the agreement under which the money was advanced should be repudiated. This contention is based upon the idea that the claim for the payment of this $1,000 can be sustained only by the complainant showing a right to be subrogated to the position of the mortgagee, to whom the money was paid. I think the contention of the defendant is wholly inequitable. The mortgagor, by its officers, induced the payment and accepted the benefits upon an agreement that it should not be a discharge pro tanto of the mortgage. The mortgagee received the payment on this understanding. The transaction was, in effect, and was treated by all the parties as, a partial payment for the purchase of the mortgage. The subsequent payment of the balance resulted in the assignment to the complainant. This arrangement might lawfully have been effected without the consent of the mortgagor Company, or its creditors, or in despite of their protest, as they had no right whatever to control or limit the action of the holders of the mortgage in disposing of it. When it was made with the assent of the mortgagor Company, which by it got the benefit to be derived from preventing a foreclosure, it does not lie with another creditor to claim a right to repudiate the agreement. Faber is wholly unaffected by this agreement. His security is not diminished. He has recourse to the same property for the payment of his debt which was originally mortgaged to him, but he is not permitted to enforce for his own benefit, as a payment, in part satisfaction of a previous lien, an advance of moneys made neither by him, nor by his debtor, which was never intended by the party paying, or the party receiving, it, to be a partial satisfaction. I think, irrespective of the application of the doctrine of subrogation, the agreement of the parties was that this advance of $1,000 was not to be deemed to be a payment in part satisfaction of the Buzby mortgage, and that it should be so decreed.
Second. The complainant contends that she is entitled, by reason of the hereinafter recited clause, making her $31,000 mortgage and that of the defendant Faber concurrent liens, to have the interest on her mortgage paid out of the proceeds of sale to the same date that the interest on the Faber mortgage has been voluntarily paid by the mortgagor Company, before any payment be made pro rata upon the concurrent mortgages. No interest has been paid the complainant on her $31,000 mortgage, and the defendant has been paid the interest on his up to May 22, 1895. The complainant claims payment to the same date from the date of the concurrent mortgages, November 22, 1892. This at 6 per cent. would require her to have a preferential payment of $4,050 for back interest. There is no other basis than the concurrent clause for this contention. A careful reading of that clause will show that it nowhere declares that the debts secured to be paid are concurrent, or to be equally paid, in any other way than by the application of the property mortgaged. They are, in fact, several debts, each represented by a separate bond, held separately by each creditor. The declaration of the contract that they shall be concurrent is limited to the statement that the mortgages "shall stand in the same position precisely as to their lien or incumbrances of the said premises, etc., hereby mortgaged, neither taking precedence of the other, but that each shall be paid proportionately out of any proceeds from sale, judicial or otherwise, of said premises." They are in the same position as to lien on the things mortgaged, but as to any other ways and means of payment there is no agreement for equality. The complainant, to entitle herself to the privilege claimed, must show that the defendant Faber has received payment of his interest from some realization, by sale or other disposition, of the property mortgaged. No such proof was made. The complainant's counsel argues that by the payment of the interest to Mrs. Van Horn, the antecedent holder of the Faber mortgage, "the assets out of which the interest on the mortgage was ultimately to be collected were diminished to that extent." But of this assertion there is no proof. The interest payments to Mrs. Van Horn may have been made from the proceeds of sales of bricks manufactured (which the learned counsel on another point in this case forcefully argues were not lawfully mortgaged), or from the generalprofits of the business, or from any other source than the realization of the property mortgaged. As above stated, no proof whatever has been submitted that the payments were made from the latter source, and it is payments derived from that source only which were to be equal. The complainant, who claims this relief, must carry the burden of the proof necessary to support it. As she has failed to carry it, the relief sought must be in this particular denied. I am referred to the case of Stevens v. Railroad Co., 13 Blatchf. 412, Fed. Cas. No. 13,406, as authority for the proposition that the back interest on Mrs. Mclnnes' concurrent mortgage, up to the date that the interest has been voluntarily paid to Mr. Faber on his concurrent mortgage, should be preferentially paid to her from the proceeds of sale of the mortgaged premises, before making any pro rata dividend between both concurrent mortgages. That case is not so reported as fully to disclose the original contract under which the preferential payment of interest was claimed. Nothing in the case, in my view, supports the complainant's contention that where the concurrency of two mortgages is limited to a hen on the property mortgaged, a voluntary payment to one of the mortgagees, not shown to have been made from the property mortgaged, should entitle the other mortgagee to an equalizing preference out of the mortgaged property. The contract of concurrency in the case now under consideration extended only to the equal sharing of the proceeds of the things mortgaged, not to the equal payment of both debts from whatever source the mortgagor might choose to pay. The mortgagor was at liberty wholly to discharge one of the concurrent mortgages, and to leave the other wholly unpaid, provided it did this from other sources than the mortgaged property.
Third. The defendant Faber, by the cross bill, charges that the complainant defrauded him, by purchasing the previous Buzby mortgage, and foreclosing it, for the purpose of devesting the lien of his subsequent mortgage, and by entering her judgment against the Company without his knowledge. So far as these allegations impute an improper and fraudulent motive to the complainant in purchasing and foreclosing her mortgage, or in entering her judgment, they are not only denied by the complainant in her invited sworn answer, responsive as to her good faith in these proceedings, but, from the very nature of the case, these matters cannot be set up either as a defense, or as a ground for relief under the cross bill. The purchase of the first mortgage and its foreclosure by the complainant and her suit in the supreme court were each and all of them assertions of her legal rights, which she was entitled to secure by those courses of procedure. There is in this case no indication that she ever had in view any purpose to do any more than obtain such a sale of the property as would secure payment of her claims, and as its accumulation of debt made desirable. But, however bad her motives may have been, so long as she acted in a lawful manner in the assertion of her legal rights, that she was actuated by evil motives constituted no defense to this suit to foreclose her mortgages. This has been finally settled, if it ever was questionable, in McFadden v. Railroad Co., 49 N. J. Eq. 176, 22 Atl. 932, and Davis v. Flagg, 35 N. J. Eq. 491. The other allegations of fraudulent conduct against the complainant, set up in the cross bill, are that she entered judgment against the defendant Company without the knowledge of Mr. Faber, and caused its property to be levied on and sold by the sheriff, including, as part thereof, some of the property known by Mrs. McInnes to be covered by Mr. Faber's mortgage; that no notice of the sale was posted on the premises; that Mrs. McInnes bought at an inadequate price, and has removed the property, to the impairment of Mr. Faber's mortgage security; and that the whole transaction, on the part of Mrs. McInnes, was the development of a fraudulent scheme to acquire the defendant company's property without paying Mr. Faber's mortgage. In order to understand the significance of these accusations, it is necessary that the relations of the parties should be stated. The defendant Company was engaged in the brick-making business, with a plant (the mortgaged premises) in Burlington county, and making sales largely in Philadelphia. Mr. Faber held the smaller one of the mortgages, which were concurrent liens on the property of the Company. Mrs. McInnes held the other and larger concurrent mortgage, an additional mortgage for $11,000, and also some unsecured loans. The debtor Company was in arrears for interest on its mortgages, and could not pay even its current debts. It plainly appeared that the threatened insolvency of the debtor Company was known to both the complainant and the defendant. A conference was held between them, to ascertain whether they could agree to arrange their claims. They could not, and almost immediately each took steps to bring suit against the Company, and the subsequent proceedings of each were the struggle for priority in fastening their debts on the property of their debtor. On July 2, 1896, the defendant Faber entered a judgment against the Company on his bond, and levied on the Company's stock of bricks in Philadelphia, its books, and its bank account. On the same day the complainant filed her bill to foreclose. On July 6, 1896, the complainant brought suit against the Company in New Jersey supreme court. On July 21, 1896, the defendant Faber issued an attachment in Philadelphia against the Company. The conference between these parties, and the rapidity of these subsequent proceedings, taken by each of them separately for the protection of their several and respective claims against the Company, satisfy me that they were dealing with each other as antagonists, at arm's length,each warned of that fact, and neither entitled to any disclosure or notice of the other's proceedings in the course of the struggle. There was no pretense of any relation of trust, agency, or other priority which cast upon the complainant any duty to inform the defendant Mr. Faber of her proceedings against the Company. They were both creditors, striving for the recovery of their debts from a common debtor, each with actual notice of the purpose of the other to collect the debt. Mr. Faber did not prove that he informed Mrs. McInnes of his very summary proceedings against the Company in Pennsylvania, nor did she inform him of her action in New Jersey, begun a little while afterwards; nor was there any requirement, in law or equity, that either of them should have given such notice. Neither of them relied on it, nor expected it, and either would justly have been surprised had it been given by the other. The charge that property previously mortgaged to Mr. Faber was levied on and sold by the sheriff is discussed hereafter, but, if true, it is of little weight, as it was undisputedly shown that none of the property, except of the trifling value of $4.20, was removed; and Woodside v. Adams, 40 N. J. Law, 418, is authority that such a mere levy and sale of the equity of redemption of the mortgagor is, of itself, no injury to the mortgagee. To injure him, there must be such dispersion or other disposal of the chattels that he is deprived of his remedy. The allegation that no notice of the sheriff's sale was posted on the premises is not stated to have been in any way contrived by the complainant. There is no legal requirement that such a notice shall be posted on the premises, nor do I recall that it was proven that in this case it was not done, and the proof was clear that the sale was well attended by men engaged in the brick business, and others. The evidence does not show that Mrs. McInnes purchased at an inadequate price. Articles less advantageously salable than the fittings and belongings of a brickyard, and bricks in the various stages of preparation for market, can scarcely be imagined. The purchaser has cast upon him the further burdens of completion, handling, delivery, and final sale to the consumer. He must pay cash to the sheriff for the goods, and take his chances for their final profitable disposal. These are inherent qualities which necessarily attend upon any judicial sale of such articles, and seriously reduce the prices which may be obtained. That they brought a much less price than the same goods would have brought had they been finished and delivered is very probable, but this does not prove that the price obtained by the sheriff in their unfinished condition, and at such a distance from the market, is inadequate. The statement that the goods mortgaged had been removed, to the impairment of Mr. Faber's security, if it was primarily proven, was conclusively refuted, as the evidence shows that the only removals were some of the goods of the value of $4.20. So the general allegation that all the actions of Mrs. McInnes were parts of a fraudulent scheme to acquire the defendant Company's property without paying Mr. Faber's mortgage is not sustained by the proofs. Each of the acts specified has either been denied and disproved, or shown to have been within the lawful rights exercisable by the complainant. The complainant having refuted each of the instances of fraudulent action set up, it cannot be that the sum of them all constitutes a fraud.
The defendant Faber insists that the cases of Tomkins v. Tomkins, 11 N. J. Eq. 514, and Mechanics' Nat. Bank v. H. C. Burnet Manuf'g Co., 33 N. J. Eq. 486, support his claim that the complainant has been guilty of a fraud upon him, because they lay down the doctrine that the court of chancery will grant an injured party relief against the fraudulent use of a bona fide judgment. No one disputes this principle, but this case under consideration does not call for its application. In the Tomkins Case the court stated the very instance on which the defendant here relies. "If," it says, "by any artifice or unconscionable contrivance, the plaintiff has become himself the purchaser of the defendant's property at a grossly inadequate price, this court will grant relief, by holding him a trustee, and will compel him to account for the property at its fair value, or subject it to another sale." It is not because the judgment is bona fide, and that it injures some other party, that this court interferes. Every judgment which precedes another judgment has that effect, to some extent, on the subsequent judgment. It is because of the artifice, trick, unfair advantage, or breach of some fiduciary duty, on the part of the holder of the judgment, or the protection of the debtor from the claims of other creditors, that this court takes jurisdiction, and prevents the success of fraud. The other case (Mechanics' Nat. Bank v. H. C. Burnet Manuf'g Co.) is of the same character. The judgments appeared to have been honestly entered, but they were used by the plaintiff to enable the defendant to cheat the other creditors, and this court set aside the sale by which this fraud was perpetrated. In the case in hand, the two parties were creditors, striving to secure their several debts, asking, expecting, and entitled to no favors from each other. One, by proceeding in the state where lay the burden of the debtor's property, and by legal methods, secured a prior lien. The other, who was seeking by the same means in another state to attain the same end, thereupon declares this is a fraud, and asks a decree against his competitor. There is nothing shown which will sustain the cross bill. All that is alleged which has any significance has failed of proof, and what was offered to be proven under the claim of significance was either not alleged in the pleadings,or was inadmissible in the evidence. Nothing has been proven which indicated any purpose or act on the part of the complainant to aid the defendant Company to avoid the application of its assets to the payment of its debts. She took her proceedings for the purpose of securing, from the property of her debtor, the debts admitted to be honestly due to her. If in doing this she was more diligent or better advised as to her remedy than another creditor, that was her lawful right, and no ground for complaint.
Fourth. The remaining contention on the part of the defendant Faber, by his cross bill, is that the stock of raw material, the brick manufactured and in process of manufacture, the tools and equipment of the brickyard, and other personal property sold by the sheriff under Mrs. McInnes' levy, are all subject to the lien of Faber's concurrent mortgage, recorded July 16, 1896, as a chattel mortgage. The words of that mortgage which it is claimed included these articles are: "Together with the buildings and improvements of whatsoever kind now on the same erected, and the engine, boilers, machinery, shafting, etc., and personal property now or hereafter to be put therein, or attached to the said premises." The defendant insists that these words include within the lien of his mortgage all personal property of every character which at any time was put in or attached to the mortgaged premises. The complainant contends that the special mention of the boiler, engine, machinery, shafting, etc., indicates the class of personal property which should be subject to the mortgage, and it was such personal property as was of this permanent character which was to be included; that the whole object of the business was to make, sell, and deliver bricks, and that to have included this product within the lien of the mortgage would have prevented the transaction of all business by the Company. The complainant further suggests that the defendant Faber construed the meaning of his own mortgage not to include bricks and all other personal property, when he issued an attachment and levied on the bricks of the Company. The clause in question relating to personal property is so drawn that its precise meaning is not without doubt This point it is, however, not necessary to pass upon, because of the interpretation of the chattel mortgage act by the court of errors in Roe v. Meding, 53 N. J. Eq. 350, 33 Atl. 394. In that case a chattel mortgage had been given by the mortgagor, who retained the possession of the goods mortgaged. The chattel mortgage was not recorded for 10 weeks. It was held to be void against creditors of the mortgagor, under the fourth section of the chattel mortgage act (2 Gen. St p. 2113); citing Williamson v. Railroad Co., 29 N. J. Eq. 336. In this case Mr. Faber received his mortgage at least as early as its record as a real-estate mortgage, January 19, 1893. He did not record it as a chattel mortgage until July 16, 1896, more than three years after. Meanwhile the mortgagor had continued to retain possession of the goods mortgaged. Mrs. McInnes, in respect to her loans to the mortgagor Company, made during 1895 and 1896, became such a creditor of the mortgagor as is protected by the fourth section, above cited. She afterwards recovered judgment against the mortgagor Company, and by levy thereunder sold its personal property. If Mr. Faber's chattel mortgage should be so construed as to include the goods which were sold under Mrs. Mclnnes' levy, he would still have no remedy against her, because his mortgage, so far as it is a chattel mortgage, was void as to her. In Roe v. Meding, ubi supra, it was declared that the terms of section 4 of the chattel mortgage act require that the chattel mortgage, where the mortgagor continues in possession, must be recorded "as soon as may be, by reasonable dispatch, under the circumstances of the case," for the obvious reason that all creditors may, as soon as possible, be advised of the actual financial status of their debtor in respect to personal property, which, save for the record, he would appear to own without charge. When a chattel mortgage is recorded, creditors already having claims may, with knowledge of that fact, elect whether they will extend the time of their payment, or proceed at once to collect them. Those who are invited to become creditors will not be misled by the apparent financial responsibility of the mortgagor, because of his possession of valuable personal property. The terms of the statute are held to be absolute in making a chattel mortgage, where possession remains in the mortgagor, void as to creditors unless it be recorded with diligence; and knowledge on the part of the creditor of the existence of the chattel mortgage will not preclude him from treating the mortgage as void. Mr. Faber's concurrent mortgage is, within these rulings, void as a chattel mortgage against Mrs. McInnes as a creditor in respect to her unsecured loans, and he is entitled to no relief against her, based on his claims of a mortgage lien on the chattels of the Company. If the goods were in fact mortgaged as chattels to Mr. Faber, and his mortgage were valid as against Mrs. McInnes, I am fully satisfied, from the evidence, that there has been no such disposition of the goods levied on and sold as, under Woodside v. Adams, ubi supra, is necessary to give to a chattel mortgagee a right of action against a purchaser of the equity of redemption by sale under a subsequent judgment.