Opinion
No. 49/523.
03-22-1921
DICHTER v. NAGLE.
Edward Schoen, of Newark, for complainant. R. N. Crane, of Plainfield, for defendant.
Bill by Aaron Dichter against Clayton M. Nagle. Heard on bill, affidavits, and answering affidavits. Decision in favor of complainant, and complainant's motion to amend bill of complaint granted.
Mr. Schoen produces chattel mortgage made by Aaron Dichter and Lillian Dichter to Max Horowitz, dated January 31, 1921, to secure the payment of $5,000, recorded February 2. 1921, in the office of the register of Union county, and canceled of record March 15, 1921, as appears by certificate of the register of said county indorsed thereon, and asks that said mortgage be marked in evidence.
Edward Schoen, of Newark, for complainant.
R. N. Crane, of Plainfield, for defendant.
FIELDER, V. C. (orally). I must deal with the situation as I find it on the bill of complaint and the affidavits accompanying the bill and the answering affidavits. They disclose that a contract was entered into between the complainant and the defendant by way of a chattel mortgage, and the rights of the parties are outlined and defined by the chattel mortgage.
The chattel mortgage contains in the fifth clause the following:
"That the parties hereto further agree that the parties of the first part shall not put any chattel mortgage or permit any other lien of any nature whatsoever on their stock in trade herein mortgaged or on the fixtures now orhereafter to be placed upon said premises, which will in any way interfere with or subordinate the mortgage herein given."
It appears that after the chattel mortgage in question was given, the owner of the property, who is the complainant in this cause, gave to Max Horowitz another chattel mortgage dated five days later than the first one and recorded several days later, purporting to cover certain goods and chattels contained in the same premises described in the first mortgage. It further appears that the defendant in this case has given notice in writing to the complainant that the second mortgage was considered by him to be a violation of the covenant or condition which I have quoted, contained in the mortgage first made and recorded, and that by reason of the execution and recording of the second mortgage the defendant had elected and decided to demand immediately the amount due on his mortgage, and in default of payment by a date named to commence foreclosure proceedings.
That would present for decision the question as to whether the second mortgage was in violation of the terms and conditions of the first mortgage, and whether the second mortgage would in any way interfere with or subordinate the lien of the first mortgage. Because of the date of the two instruments and their date of record, it would appear that the second mortgage could not in any way interfere with the lien of the first mortgage. I do not think it is necessary for the purposes of this motion to examine and construe the provisions of the two mortgages when it appears that the mortgagee in the second mortgage does not claim a lien on the mortgaged chattels superior to the lien of the first mortgage, because the second mortgage is now produced in court, canceled of record, and it is no lien whatever on the chattels described in the first mortgage. The reason assigned by the defendant in his notice to the complainant for foreclosing the said mortgage cannot now exist, if it ever existed, and I think it would be most inequitable to permit the defendant, under the circumstances, to foreclose his mortgage, and thus compel complainant, on a few days' notice, to raise the amount secured by that mortgage, and in default of raising it possibly, lose the mortgaged property, and a part, if not the whole, of the $5,000 he had paid defendant on the purchase of the chattels.
I think therefore that the defendant should be restrained from foreclosing his mortgage for the cause assigned by him. Of course, I am not deciding whether any other default has occurred under the terms of the mortgage to the defendant, which would justify him in commencing foreclosure proceedings; he did not assign any other default in his notice to complainant. Mr. Schoen asks leave to amend his bill of complaint, in any particular, if necessary, to set up the cancellation of the second mortgage, and his motion is granted.