On appeal from the Superior Court, Chancery Division.
For affirmance -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For reversal -- None. The opinion of the court was delivered by Wachenfeld, J.
The plaintiff, trustee in bankruptcy of Nathan Tiger, sued to set aside a chattel mortgage given by Tiger and his wife to the defendants. The suit was commenced in the Superior Court, Chancery Division, by order of the referee in bankruptcy and resulted in a judgment for the plaintiff. The defendants' appeal to the Appellate Division is certified here on our own motion.
Tiger and one Irving Krause owned one-third and two-thirds, respectively, of the stock of Fairlawn Food Center,
Inc., which operated a food market in Fairlawn. Sometime in the early part of 1948, Tiger asked the defendant, Goldstein, who describes himself as a business broker, to try to obtain a purchaser for the store. Goldstein was unsuccessful during a period of several weeks. Meanwhile, Tiger was encountering financial difficulties which ultimately prompted him to seek Goldstein's aid in procuring a loan of $10,000 to provide immediate cash for the operation of the business and to enable Tiger to buy out Krause's interest. After some negotiation, Goldstein told Tiger he thought he would be able to lend him $9,000, less a $900 commission or bonus, and to this Tiger agreed.
To raise the required $8,100, Goldstein applied to the Second National Bank in Paterson. The bank was unwilling to lend the money on his signature alone so he asked Zimel, an attorney, to join with him in the transaction. The bank thereupon made the loan to them by a cashier's check dated July 22, 1948, in the sum of $8,100 and payable to the order of both defendants.
The day before the bank loan was made, Tiger and Krause had met with the defendants in Zimel's office in Paterson. There Zimel produced various documents he had prepared, including one transferring the business from Fairlawn Food Center, Inc., to the Tigers and a chattel mortgage covering the contents of the store running from Nathan and Jean Tiger to the defendants. There is some dispute as to what occurred at this meeting. The plaintiff alleges a check for $9,000, drawn by Zimel and payable to Nathan and Jean Tiger, was endorsed by Tiger with both names and immediately returned to Zimel, who wrote "Cashed" across its face and put it in his file. The defendants assert Tiger and Goldstein took the check to Fairlawn in order to obtain Mrs. Tiger's endorsement and returned it later in the day to Zimel, who marked and filed it.
An assignment of the chattel mortgage to the bank, as security for the $8,100 loan, was executed by the defendants and Zimel gave Tiger a check for $2,000 and cash in the
amount of $352.27 and to Krause he gave a check for $3,000 dated July 26, 1946. Krause received also, from the Tigers, a second mortgage on the same chattels to secure the payment of the balance due him for his interest in the business.
On the following day, July 22nd, the mortgage was recorded in the office of the Bergen County Clerk and Zimel paid $1,915.91 by certified check to one of Tiger's creditors and on July 26th paid Tiger $731.82 and credited himself with a $100 counsel fee for his services in the transaction.
These payments totaled $8,100, the amount of the bank loan. The defendants account for the remainder of the alleged $9,000 loan to Tiger by saying Goldstein gave Zimel a check for $900 which the latter returned to him as payment of his commission in negotiating the sale of the market to the Tigers. On the stand, Goldstein admitted on ...