Opinion
02-26-1895
WIEDEMANN v. SANN et al.
Gilbert & Atkinson, for complainant. H. Budd, for defendants.
(Syllabus by the Court.)
Bill by Frank W. Wiedemann aginst Annie Sann and others to foreclose a mortgage, and for an injunction, and for appointment of a receiver. Receiver appointed.
Gilbert & Atkinson, for complainant.
H. Budd, for defendants.
BIRD, V. C. The bill in this case is filed to foreclose a mortgage of chattels given by Annie Sann, asking for an injunction against an attaching creditor, whose attachment issued against Charles Sann, and also asking for a receiver. The chattel mortgage bears date January 11, 1895, and was duly recorded on the same day. It was given to secure the payment of $550, money loaned to the mortgagor. The whole of the said loan, together with interest, is claimed to be due to the complainant The bill states that on the 9th day of January, being two days before the execution and delivery of the chattel mortgage aforesaid, one Sarah M. Hall procured to be issued a writ of attachment out of the circuit court of the county of Burlington against one Charles Sann on the demand for $650, under which writ of attachment an auditor has been appointed, and that the said auditor has been ordered by the said circuit court to sell all of the said goods and chattels as perishable property, and that the said auditor has advertised all of the said goods and chattels for sale, in his advertisement or notice of sale giving assurance to bidders that he will sell the said goods and chattels free from all liens or incumbrances. The complainant, having obtained an injunction restraining the auditor from selling, now asks for the appointment of a receiver with authority to sell the said personal property. This is resisted by the plaintiff in the attachment. It will be perceived that the complainant claims that these goods and chattels were the goods and chattels of Annie Sann, and that the plaintiff iii the attachment claims them as the goods and chattels of Charles Sann. Charles Sann is the husband of Annie Sann. The complainant rests his case upon the rule laid down by Chancellor Green in Smithurst v. Edmunds, 14 N. J. Eq. 408. The case in hand is not like that. In that case the property which execution creditors offered for sale was not claimed by such creditors as the property of another person than the mortgagor of the same goods. As to that there was no dispute. Hence the question now before me is, can this court appoint a receiver in a foreclosure case to take charge of and sell personal property for the purpose of preserving it, covered by the mortgage sought to be foreclosed, when that same property has been attached by the creditor of another person, as the property of that other person, and has been advertised to be offered for sale by an auditor appointed in said attachment proceedings? In Moore v. Diament, 41 N. J. Eq. 612, 7 Atl. 509, in the court of errors and appeals, a question somewhat like the present was before the court. In that case Hammell confessed judgment to his creditors, who levied upon certain goods and chattels. Moore filed a bill in this court, alleging that he had been in partnership with Hammell, and that Hammell became indebted to him as partner, and that, to satisfy such indebtedness, Hammell had made to him a bill of sale of all his interest in these goods and chattels, and asked for and obtained an injunction restraining the execution creditors of Hammell from proceeding to a sale. A receiver was appointed in that case, and, upon Moore's offering to give a bond to take care of the property, and to return it or to pay the value thereof, except in case of unavoidableaccident, such bond was accepted. From this brief statement it will appear that execution creditors claimed a lien upon the property as the property of one man,— Hammell, their debtor,—while Moore claimed it as his own individual property absolutely, by virtue of a bill of sale made to him by Hammell, and that a receiver was appointed. The question involved in that case was one of title to personal property; Moore, the complainant, claiming the title was in himself, while the creditors of Hammell claimed that the title was in Hammell, and that they, as his creditors, by virtue of their judgments and executions, had a right to sell the same. It is claimed in this case that the question involved is purely a question of title to personal property, strictly legal in its nature, and can be determined by an action of replevin, and that consequently a court of equity has no jurisdiction. The case cited seems to present the same characteristics. Moore filed his bill, and claimed the property levied upon by virtue of a bill of sale, praying an injunction against such sale under the executions at law. Clearly, in such case, the principal question to be decided was whether the title was in Moore or Hammell. In the case now under consideration the question to be determined is whether the title to the property named in the chattel mortgage was in Annie Sann or in her husband, Charles Sann. If that were all, it might well be said that in neither case would this court be justified in assuming jurisdiction. But in the case cited, if the property which Moore claimed were to be sold by the execution creditors, with the conflicting claims of title thereto, he might, in a variety of ways, suffer great loss; which view is, in every sense, applicable to the case before me. In that case it was distinctly held in the court of errors and appeals that this court had the right to proceed to settle the rights of the parties by virtue of the bond given, notwithstanding a decree dismissing the bill of complaint in this case the complainant claims a lien upon the goods and chattels by virtue of her mortgage. She undoubtedly has a right to file her bill to foreclose such mortgage, which beyond question gives the court jurisdiction.
But still the further question arises, can this court, because it is the only tribunal authorized to foreclose a mortgage upon goods and chattels, appoint a receiver to take charge of and sell such goods and chattels, when they are claimed by and under attachment by the creditors of another person than the mortgagor, and offered for sale by an auditor appointed in such attachment proceedings? There is a well-settled rule that courts of equity have the right and power to take possession of property about which are conflicting claims, for the purpose of preserving it until the rights of the respective parties thereto have been settled. May this rule be applied to the present case? It is evident, if the auditor makes sale of the goods and chattels because they are perishable, they will be likely to sell for a nominal price only, and will also be likely to go into the possession of many different persons. The fact that the complainant makes claim in the manner in which he does will cast such a shadow upon the title as to deter prudent men from bidding. The fact that they will in all probability go into the hands of many different persons would make it obligatory upon the complainant if it should turn out that the title thereto be in him, to bring as many actions at law as there are purchasers. High, Rec. § 192. "A court of equity, appointing a receiver to take possession of property pending a litigation concerning the rights of the parties thereto, is vested with the power to sell the property in the receiver's hands, whenever such course becomes necessary to preserve the interest of all the parties." Id.; Crane v. Ford, Hopk. Ch. 114. When a court of equity properly acquires jurisdiction of the parties and of the subject-matter in a cause, and appoints a receiver therein, and orders him to sell the property in controversy, such order, although irregular and improvident, cannot be assailed or questioned in a collateral action, and such action will not lie to set aside the order of sale and proceedings thereunder. High, Rec. § 196; Libby v. Rosekrans, 55 Barb. 219; Brande v. Bond, 63 Wis. 140, 23 N. W. 101. It being evident that the auditor cannot make sale of these goods except under great disadvantage, and that, if it should ultimately appear that the title is in the chattel mortgagor, and it also appearing that since the mortgagee was justified in filing his bill in this court, thereby acquiring jurisdiction of the subject-matter, and the court unquestionably having the authority to appoint a receiver, and it being the constant practice, when a receiver is appointed, to take possession of the perishable goods and chattels which are the subject of litigation, to make sale thereof for the purpose of preserving the value of them for the parties who may ultimately appear to be entitled thereto, I conclude that it is my duty to advise the appointment of a receiver in this case, with authority to make sale of the goods and chattels in question. The defendant, the attaching creditor, offered to give bonds for the value of the goods. A bond was offered and accepted in the case of Moore v. Diament, supra, but in that case the person who gave the bond did not propose to sell them, as in this case the auditor proposes to do. I will advise accordingly.