The opinion of the court was delivered by: FORMAN
To lease a building at U.S. Route 130 and Ninth Street, Florence, New Jersey, 60' X 90', for one year beginning August 1, 1954, at an annual rental of $ 4,800, payable in monthly installments of $ 400 each for use as an auction market;
To sell all merchandise, good will, and the use of the name of Florence Auction Sales for $ 12,000, payable $ 500 on or before July 26, 1954; $ 500 on or before August 2, 1954; $ 5,000 on or before August 5, 1954; $ 6,000 on or before September 15, 1954, to be evidenced by a promissory note reduceable by the payment of $ 1,000 monthly without interest.
It was further provided that a detailed formal lease and bill of sale were to be drawn up, but that this agreement was to remain binding upon the parties and not revocable for failure to execute a future draft.
On August 24, 1954, an agreement was entered into between American Merchandising Co., Inc., a New Jersey corporation and Ray Brooks, who was its president, on the one hand, and Donald Block (for convenience, hereinafter called Block), individually and for and in behalf of Florence Auction Sales and White Horse Products Company, on the other hand. It recited that Block had sold to American and Brooks certain merchandise, formerly the stock in trade of the Florence Auction Sales, as delivered on July 22, 1954, and the good will of the auction, retail and wholesale market, and business theretofore conducted by Florence Auction. The sale was made subject to, among others, the following conditions:
The purchase price was fixed at $ 12,000, to be paid by $ 1,000 on the signing of the agreement and the balance of $ 11,000 in weekly installments of $ 250 with interest at 6 per cent, with the first weekly installment and interest due on August 30, 1954. In the event of a failure to pay any weekly installment then the remaining unpaid balance should become immediately payable in full.
To secure the payment of the obligation American and Brooks agreed:
(a) To execute and deliver whenever so requested during any time that any indebtedness remained unpaid, a chattel mortgage in proper form for recording on all property of American and Brooks,
(b) to pay out of the sales of the merchandise sold under the agreement or out of sales of different merchandise all sums due to Block, setting aside each week all proceeds of sale until a sum sufficient to pay the installment due to Block should be accumulated, and
(c) that upon failure of American to make any weekly payments when due or failure to perform the conditions (a) and (b) above, Block should be entitled to take possession of and retain all proceeds of sale each week until the amount due for such week is collected.
The agreement also contained the following provision, under which this reclamation proceeding arose:
'In the event of any failure or refusal to make when due any payment of principal or interest payable hereunder, the party of the second part (seller) shall have the right, summarily to seize and retake any of the merchandise delivered hereunder and deal with the same as its own property; in such case, said merchandise thus retaken shall be deemed to have been delivered on consignment only.'
Block alleges that on February 5, 1955, American was in arrears for the monthly rental of $ 400, which was due February 1st, and also had failed to make its installment payments for merchandise. Block therefore levied a distraint for the rent on the merchandise contained in the building.