This is an action to set aside a chattel mortgage, for an accounting and for recovery of the value of assets listed in the chattel mortgage. By order of a referee in bankruptcy, dated February 2, 1955, plaintiff was authorized to proceed in the plenary suit in this court for the purpose of setting aside the chattel mortgage and recovering the fair value of the assets of a bankrupt, Frank A. Scheier.
On July 30, 1953 Scheier executed a chattel mortgage to defendant covering certain assets in a garage property located on Highway No. 202, R.F.D. Flemington, New Jersey,
known as the Hunterdon Auto Body, to secure the sum of $2,500, repayable $100 per month with interest at 5%, first payment to be made August 30, 1953.
Defendant gave $2,500 to Scheier. The affidavit of consideration, executed by defendant's cashier is as follows:
John C. Huff, Cashier of the Flemington National Bank & Trust Co.,
the mortgagee in the foregoing mortgage named, being duly sworn, on his oath says that the true consideration of the said mortgage is as follows, viz: the sum of Twenty-five Hundred ($2500.00) Dollars as evidenced by a promissory note, for which this mortgage is given as collateral security, in the amount of $2500.00, the consideration for the said note representing cash advanced by the Flemington National Bank & Trust Company to the said Frank Scheier.
Deponent further says that there is due and to become due on said mortgage the sum of Two Thousand five Hundred dollars besides lawful interest thereon from the 30 day of July, 1953.
Subscribed and sworn to before me this 30th day of July, 1953.
At the same time Scheier executed another chattel mortgage in the sum of $2,640 on the same chattels to a Walter E. Hoffman. This mortgage contained the following statement: "It is further understood that this chattel mortgage is second in lien to a chattel mortgage heretofore given to the Flemington National Bank and Trust Company of Flemington, New Jersey." The two mortgages were recorded on July 30, 1953, at 3:25 o'clock P.M. Scheier made the August 30 and September 30 payments on time. Other payments, although not paid on time, were made and a total of $800 on account of principal was paid, the last payment on April 9, 1954.
On or about August 1, 1953 Scheier made a list of the assets purchased and valued them at $3,969.70. Thereafter
he submitted financial statements dated August 31, September 30 and November 30, 1953 showing assets of $7,755.08, $8,201.52 and $9,457.03, respectively. On June 3, 1954, because of default in payments on the mortgage, defendant gave public notice of the chattel mortgage sale for June 21, 1954 at 2:00 P.M. by publishing the notice in the Hunterdon County Democrat , a weekly newspaper published at Flemington. The notice listed the assets still in the defendant-mortgagor's possession. The constable in charge of the sale posted notices of sale for 10:00 A.M. instead of for 2:00 P.M. for June 21. The notices also contained a mistake in the amount due by reason of other indebtedness which Scheier owed to the bank. At 10:00 A.M. on the scheduled day of the sale, no one bid except defendant. Others had appeared, examined the chattels and left without awaiting the sale. The ...