Opinion
Submitted May term, 1936.
Decided October 2d 1936.
1. The law requires that there be attached to a chattel mortgage an affidavit by the lender stating the true consideration for the mortgage.
2. Where it appears that no money was paid on the date that the mortgage was executed, the affidavit alleging payment of a certain sum of money is false and the mortgage is void as against creditors.
3. An affidavit wholly false when made cannot be regarded as an honest and substantial compliance with the statute.
4. The intention to give credit when the affidavit was made, together with a subsequent delivery of the consideration, does not cure the defect.
On appeal from the court of chancery.
Mr. John J. Clancy and Mr. Merritt Lane, for the appellants.
Mr. Israel B. Greene, receiver, pro se, for Utility Trucking Company.
The appeal is from an order entered in the court of chancery holding a chattel mortgage invalid as against creditors. The mortgage dated March 7th, 1935, was recorded the next day but not until the day following was a check for the consideration, dated March 9th, 1935, delivered. The affidavit of consideration, required by law, stated that a certain sum of money corresponding to the amount of the check, later delivered, was paid on the date of the delivery of the mortgage. This was not so, since no consideration was then paid. The court of chancery reached its conclusion in reliance upon Tingley v. International Dynelectron Co. et al., 74 N.J. Eq. 538; affirmed, 76 N.J. Eq. 337; Stanber v. Sims Magneto Co., 98 N.J. Eq. 38; affirmed, 132 Atl. Rep. 922.
Appellant argues that the rule laid down in American Soda Fountain Co. v. Stolzenbach, 75 N.J. Law 721, and thereafter followed in a number of chancery decisions, is controlling. Those decisions hold that in the absence of fraud an honest and substantial statement of the consideration is a compliance with the statute.
At the time the mortgage was executed no money had been advanced and no indebtedness for cash loans existed. It is apparent that the statement in the affidavit was untrue, and the mere circumstance that the mortgagee intended to make the advances and give the borrower credit does not alter the fact that on the date of the mortgage no moneys whatever had been paid. There was, therefore, no compliance with the statutory requirements, since there had been no money that day paid.
The order appealed from is affirmed.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, LLOYD, CASE, BODINE, HEHER, PERSKIE, HETFIELD, DEAR, WELLS, WOLFSKEIL, RAFFERTY, COLE, JJ. 14.
For reversal — None.