Oil City Boiler Works v. New Jersey Water & Light Co.

The opinion of the court was delivered by Parker, J. We conclude that the judgment of the Supreme Court should be affirmed, substantially for the reasons contained in the opinion of the learned Circuit Court judge. But there is one element in the case not touched upon in those conclusions, and that is the status of purchasers of the receivers’ certificates issued in the Colonial trust foreclosure, and of subsequent certificates in the Sheppard foreclosure as against the plaintiff’s claim of title. The trial judge seems to have considered that such status was immaterial because the bidder at the foreclosure sale was notified of plaintiff’s claim. But we think that if bona fide holders of the certificates were entitled to a lien on the boilers in question, paramount to the claim of plaintiff’s under the agreement of conditional sale, the same right passed to purchasers at a sale in foreclosure of that lien and was not defeated hv notice to them. Holmes v. Stout, 3 Gr. Ch. 492; 2 Stock. 419; Rutgers v. Kingsland, 3 Halst. Ch. 178, 658. Hence, it becomes material'to inquire whether the purchasers of such receivers’ certificates, if, as we assume, they were bona fide purchasers, acquired any lien on the boilers which, if made the foundation of a sale, would defeat the plaintiff’s rights; and this in two aspects—first, on the theory that the boilers became part of the real estate; and secondly, under the Gondii ional Sales act. On the first theory the following facts and rules of law are pertinent: As between plaintiff and the .Eagle Construction Company the boilers could uot be other than personal property under the terms of the contract that they and the “fixtures, mason work, setting, &c., are to remain the property of the Oil City Boiler Works until fully paid for in cash.” They remained personal property as between plaintiff and the Elheron Water Company when installed on the premises of the latter company with notice to it of the terms of the contract. [496] At that time the Colonial Trust Company mortgage was already a lien on the Elberon company’s plant, and, consequently, the status of the boilers as personal property remained as to the mortgagee. Palmateer v. Robinson, 31 Vroom 433, cited bjr the court below. So that" upon a foreclosure sale under the Colonial Trust Company ■ mortgage the boilers would normally not pass to the purchaser, who could get no better rights than the mortgagee in the absence of some estoppel running to him as against the vendors. It is difficult to see how the Court of Chancery could make the receivers’ certificates, issued in aid of the Colonial Trust mortgage and in a suit for the foreclosure thereof, a lien upon any but the mortgaged property. So to hold would result in giving a mortgagee the benefit of a lien on such other property for the protection of his mortgage—a proposition the inequity of which is obvious. The holders of certificates issued in the Sheppard suit are in the same position, except that they are one remove further from the position of bona fide mortgagees, as their certificates were issued as ancillary to those already dealt with in a foreclosure brought by the holder of the earlier certificates. Secondly, did the holders of these certificates acquire any rights under the statute ? They were, of course, not judgment creditors of the person contracting to buy; nor were they purchasers of the chattels in good faith. We think they were not mortgagees thereof in good faith, in the meaning of the statute. The same argument that has just been made applies equally to them in this aspect, and, consequently, it becomes unnecessary to consider whether the phrase “subsequent mortgagee in good faith,” as used in the statute, should be held to include one acquiring a lien created not by the party himself but by a court in the process of a litigation. So that in either aspect the holders of these receivers’ certificates acquired no lien on the boilers in dispute and could transmit none to those claiming under them. We have considered with care the other points and arguments submitted for a reversal of the judgment, and find them without merit. The judgment under review will be affirmed. [497] For affirmance—The Chancellor, Chief Justice, Garrison, Swayze, Eeed, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredbnburgh, Vroom, Congdon, Sullivan, JJ. 15. For reversal—E one.