Howe v. Keeler

27 Conn. 538

• Court: Supreme Court of Connecticut
• Decided: October 15, 1858
• Status: Published

Opinion

Sanford, J.

The due organization of the Bridgeport Woolen Mills, and the election of a board of directors for the management of its concerns on the 4th of April, 1855, were admitted in the argument. And the superior court has found that the persons who appear by the records of the corporation to have been chosen directors, acted as such, and as such carried on the business of the corporation, up to the 11th of November, 1856, and that, on that day, Kelsey, acting in behalf of the corporation, and, as the plaintiffs claimed, under a vote of its directors, delivered the keys of the factory to the plaintiffs on the premises, and the plaintiffs thereupon took into their own hands the control of the manufacturing establishment, and the machinery and goods therein, including the articles in question, under a contract which the plaintiffs claimed had been made between them and the corporation, dated the 12th of April, 1855, and which authorized the plaintiffs to take possession, on certain contingencies therein mentioned, for the purpose of carrying on the business thereafter, under said contract and according to the provisions thereof.

The defendant claimed that no authority was shown for the execution of the contract referred to, and also claimed that said Kelsey had no authority to surrender the property to the plaintiffs, because, from the meeting at which he was appointed agent for that purpose, one of the directors was absent, and no evidence was offered to show that that director was notified to attend said meeting.

The finding of the superior court however shows, that a mortgage was made to the plaintiffs of all the property of the corporation, bearing the same date as the contract, and executed on behalf of the corporation by the. president thereof, and that said contract and mortgage reciprocally count upon and recognize the making of each other, and purport to form parts of one and the same transaction, and that, at a meeting of the directors of the corporation, on the 25th of April, 1855, a vote was passed, which in terms authorized the president to sign and affix the seal of said corporation to said mortgage ; and from the magistrate’s certificate the mortgage appears to have been acknowledged after the vote of the 25th of April was passed, to wit, on the 30th of the same month.

It may therefore fairly be presumed, that neither the contract nor the mortgage, though both bearing date the 12th of April, was in fact delivered until after the acknowledgment of the mortgage on the 30th. And on the 5th of the succeeding month of May, at a meeting of the directors of the corporation, it was “ voted, that the mortgage deeds made by the agent appointed by this company on the 25t'h of April, 1855, wherein a conveyance is made to J. C. Howe & Co. of the real estate, mills and machinery belonging to this company, is hereby ratified and fully approved.” No objection is made to the organization of the last mentioned meeting of directors, and it is of little importance whether the meeting of the 25th of April was duly convened, or the vote of that date sufficiently specific in its reference to the instrument to be executed or not, because the vote last referred to, as well as the subsequent conduct of the parties, operated to confirm and ratify the mortgage, and, by consequence, the contract also, to which the condition of the mortgage expressly refers, and to secure the performance of which the mortgage was made.

Upon the question whether the vote of confirmation was effectual for the purpose for which it was passed or not, we were referred to no authorities. And we only say in regard to it, that it is by no means clear that this case does not fall within the operation of the rule, that a subsequent assent to, and approbation of, an act done, is equivalent to a prior authority to do it. The authority of an agent to convey the real estate of an individual must, by the express provisions of the statute, be evidenced by a written power executed with all the solemnities of a deed from the grantor himself. But this statute is inapplicable to a conveyance from a corporation aggregate. Savings Bank of N. Haven v. Davis, 8 Conn., 191. And, it being a mere question of authority in the agent to affix the seal, it is not easy to see why the consequences of the act done, might not, in this as in other cases, be assumed, in the same manner as the authority to do the act might have been originally conferred.

But, however this may be, it is found by the court below that “ it incidentally appeared, that said contract of April 12th, 1855, was acted upon by the parties, and the business of the Woolen Mills carried on under it, and that on the 11th day of November, 1856, a large amount of the cloths of the said Bridgeport Woolen Mills, of the value of about seventy-five thousand dollars, was in the hands of the plaintiffs unsold, on account of the dullness of the market,” &c. Here, then, was a practical ratification of the contract, by recognizing its validity and conforming to its requirements for more than eighteen months. And under and in conformity to the stipulations of the same contract, as we have already noticed, the plaintiffs took and held possession of the factory, and of the machinery and other personal property therein, including the property in question, without objection from the corporation, and with its tacit if not express assent. It is clear therefore, that, as between the plaintiffs and the corporation, both parties would be held bound by the stipulations of the instruments under which they had so long acted, and that their respective rights and interests in the property in question must be determined by the provisions of those instruments. And the defendant’s title to the property can be no better than that of the corporation under which he claimed.

But the defendant claims, that, upon the true construction of the contract, the plaintiffs acquired no title to the property, but took and held it only as the agents of the corporation— to run the mills and carry on the business at the risk, and on account of, the corporation—and thatsothe property remained, in contemplation of law, in the possession of the corporation, unchanged, and subject to attachment at the suit of the creditors of the corporation, notwithstanding the pretended surrender of the possession of said property on the 11th of November, 1856.

It is however obvious that the contract was intended by the parties to secure to the plaintiffs the loan of forty-five thousand dollars made, and the further advancements to be made to, and liabilities incurred for, the corporation by the plaintiffs, and that one of the leading objects of the plaintiffs in taking possession of said property was to perfect their security and render it available for the payment of their claim. The instrument begins with an acknowledgment of the loan, and a statement of the consideration and inducement on account of which such loan was made. It counts upon the agreement of the corporation to consign its manufactured goods to the plaintiffs to be sold on commission, and the plaintiffs’ undertaking to make further advancements to the corporation on the credit of such consignments. And .the corporation undertakes to stock and run its mills within' sixty days from the date of the contract, and to keep the same so stocked and running to their full and fair capacity, unavoidable casualties excepted, during the continuance of the agreement, and until said loan should be paid in full, and to consign to the plaintiffs all goods then in the hands of the corporation, and all goods thereafter to be manufactured at said mills, to be sold by the plaintiffs on commission. And the plaintiffs agree to make further advancements on the goods consigned, by accepting the drafts of the corporation at the end of every month, to the amount of one half of the net proceeds of the previous monthly sales, after deducting all advancements, interest and other charges agreed thereon—the other half of such net proceeds to be retained by the plaintiffs, to constitute a sinking fund, toward the payment of the principal of the forty-five thousand dollars loaned. The contract then provides that the corporation may put an end to it at any time, by giving the plaintiffs sixty days notice of its. desire to do so, and paying up to the plaintiffs all debts and demands outstanding or due to them from said corporation under the agreement, then due or subsequently maturing; and that if the corporation shall fail to run said mills up to their full and fair capacity as aforesaid, or omit to pay and satisfy the debts and demands due to the plaintiffs under said agreement, or make or suffer any other breach of any of its promises or agreements contained in said contract, then the plaintiffs may immediately enter and take possession of said mills, and all machinery, goods, stock, supplies and fixtures therein, and all the water power, buildings, lands and all their appurtenances, &c., and stock and run said mills for account and risk of said corporation, charging additional commissions therefor, or may suffer said mills to remain unemployed in their possession, or sell the same, and all the machinery and other fixtures therein, at the election of the plaintiffs, and out of said sales retain the amount due to them, whether payable then or afterwards; and that if the net proceeds of such sales shall be insufficient to pay all the plaintiffs’ claims against the corporation, the balance shall be paid by the corporation on demand. The contract also refers in express terms to the mortgage, and states that it was given as security for the payment of the loan and the performance of the contract by the corporation, and is to be taken as part of said contract.

From this examination of the provisions of the instrument * under which the plaintiffs took and held possession of the property, it is clear that their possession was coupled with an interest, of which they could not be deprived, either by the corporation or any other person, but on the terms expressed in the contract—the payment of their just claims upon the property so held for their security.

Again, it is contended by the defendant’s counsel, that the attempted transfer of the property to the plaintiffs, was, as against the creditors of the corporation, fraudulent and void, because the possession did not accompany and follow the transfer. .

Whether the possession was changed or not was a question of fact, which it is not the province of this court to decide. In the case of Peck v. Whiting, 21 Conn , 207, to which we were referred by the counsel, the goods were attached while in the actual possession of one of the assignors and original owners. No change of possession was claimed to have beén made. In the language of Judge Hinman, who delivered the opinion of the court, “ the case turned upon the question whether there was any legal reason for the possession being retained by one of the assignors after the assignment.” No such question appears to have been made in this case.

The facts found by the court below—to wit, that the same kind of business was carried on at the factory after the transfer as before—that the same book-keeper and workmen were employed, and the books kept in the same office—and that the agent of the corporation continued after, as before the transfer, to be occasionally in said office—although proper for the consideration of the superior court, that it might deduce from them the proper inferences and conclusion, are quite insufficient to enable this court to decide that such a change as the law required had not been made. And especially can we not so decide, in view of the other facts found by the superior court, and stated upon the record in the same connection, but tending to a different result.

In regard to the machinery, the defendant claims that the ^plaintiffs acquired no title to it under their mortgage, because it was not particularly described in said mortgage. There can be no doubt but that a mortgage of movable machinery left in possession of the mortgagor, is constructively fraudulent and void as against attaching creditors of such mortgagor, unless all of the statute requisites are complied with ; one of which requisites is, that the mortgage shall contain a particular description of such machinery, which this mortgage does not. But neither the statute, nor the common law, requires such particular description of machinery mortgaged with the mill in which it is situated, and used, and actually delivered with the mill into the possession of, and held by, the mortgagee. The want of it indeed, might perhaps afford some evidence of fraud, but would probably fall short of making even a prima facie case of it.

It is contended that the plaintiffs are not entitled to judgment, because they gave no evidence of the state of their accounts with the corporation at the time of the attachment, and no proof that their claims against the corporation, for the security of which they held the property, had not been satisfied and extinguished. No claim was made upon the trial, that the original transaction between the plaintiffs and the corporation was fraudulent in fact, or that the loan of forty-five thousand dollars was not, in good faith, made as stated in said mortgage. And the superior court has found that the plaintiffs took possession under the contract, for the purpose of carrying on the business thereafter according to the provisions of such contract. Thus the existence of the plaintiffs’ debt, and of their right to take possession under the contract, was recognized by the parties, and upon the rightful acquisition of possession the plaintiffs became special owners of the goods ; and their title is presumed to continue until it is shown to have become extinct. If the accounts between the plaintiffs and the corporation could have been investigated and ascertained in this suit, to which the corporation was not a party, certainly they could not without great inconvenience. But, waiving that consideration, it is enough for our purpose that it was not incumbent on the plaintiffs to prove that their debts and claims had not been satisfied, or their title not otherwise extinguished, and no evidence upon the subject was offered by the defendant.

Upon the whole, then, we think the plaintiffs are entitled to recover the value of the cloths, as found by the superior court, with interest thereon from the 22d of November, 1856, and also the damages assessed by that court on account of the attachment of the machinery. And we advise the superior court to render judgment accordingly.

In this opinion the other judges concurred.

Judgment for plaintiffs advised.