The name Challey is a varient of the name Chally, which, in turn, is derived from the Norwegian name Tjelle. Tjelle is the name of a farm located near the village of Skånevik in Hordaland in west Norway south of the city of Bergen.
Family members who immigrated to the U.S. around 1850 changed the name to Chally in order to make it easier to pronounce for English speakers. Some of the family added the ..ey ending. Perhaps this was done to make the name sound more English.
There is also a place name in England, which is presumably unrelated to the Norwegian name. I do not know if there are currently any persons of English origin who use it as a family name, although is is entirely possible that there are. ... john