John Gill & Sons v. Kahl-Holt Co.

47 App. D.C. 53, 1917 U.S. App. LEXIS 2595

• Court: Court of Appeals for the D.C. Circuit
• Decided: November 12, 1917
• Docket: No. 3026
• Status: Published

Opinion

Mr. Justiee Robb

delivered the opinion of the Court:

It is not denied that the agreement between appellee and Bevans was legal and valid as between them. By failing to have that agreement reduced to writing and recorded, appellee merely assumed tlio risk that a legal wrong, within the meaning of the statute, might be inflicted upon third parties, in other words, appellants’ rights are dependent upon and measured by the statute; and since this statute restricts the rights of property by regulating its use, its scope may not be broadened by construction. Woolley v. Genera Wagon Co. 59 N. J. L. 278, 35 Atl. 789. The statute under investigation in that case declared unrecorded conditional contracts of sale “absolutely void as against subsequent purchasers and mortgagees in good faith,” and creditors were held not to be within its protection. In Fosdick v. Schall, 99 U. S. 235, 25 L. ed. 339, a railroad company in Illinois had entered into a contract with “A,” whereby lie agreed to sell and deliver to it, at a price payable in instalments, a number of cars which, until they should be paid for, were to remain his property. Prior to this contract the company had mortgaged to “B,” as trustee, its franchise, issues, and protits, and all the property it then possessed or might thereafter acquire to secure the payment of certain bonds It was held that the lien of the mortgage did not attach to the cars upon their delivery to the company so as to defeat A’s reclamation of them as against the mortgagee. Under the ¡aw in Illinois such a transaction bad no validity as against third persons. The question therefore was whether the mortgagees occupied the position of third persons within the meaning of the Illinois statute. The court said: “They [the mortgagees] are in no sense purchasers of the cars. The mortgage attaches to the cars, if it attaches at all, because they are ‘after-acquired’ property of the company; but as to that class of property it is well settled that the lien attaches subject to all the conditions with which it is encumbered when it comes into the hands of the mortgagor. The mortgagees take just such an interest in the property as the mortgagor acquired; no more, no less. * * * The title of the mortgagees in this case, therefore, is subject to all the rights of Schall under his contract.” Again, in Myer v. Western Car Co. 102 U. S. 1, 26 L. ed. 59, where were involved the rights of a similar mortgagee, hut under the laws of Iowa which denied validity to an unrecorded conditional sale as “against- any creditor or purchaser of the vendee or lessee/’ the court held that the term “third person” as used in the Illinois statute was the same in legal effect as “creditor or purchaser” as used in the Iowa statute, saying: “In Fosdick v. Schall we held that the mortgagee whose mortgage embraced property to be acquired in the future was in no sense a purchaser of such property. Ilis rights were not granted after the property was bought by the mortgagor. lie got nothing by this provision in his mortgage except what the mortgagor himself had acquired. He paid nothing for his new security, lie took as mortgagee just such title as the mortgagor had; no more, no less.”

We see no difference in principle between the two cases determined by the Supreme Court of the United States and the one under consideration. The material here involved had not been delivered when the conditional assignments to appellants were made, and was brought within the scope of these assignments by the provisions relating to after-acquired property. When, therefore, Bevans defaulted under his subcontract and these conditional assignments became effective, the title of the assignees to the material here involved was subject to the conditions with which it was encumbered. In other words, appellants under their conditional assignments merely stepped into the shoes of Bevans, and their title as assignees was no better than his. The conditional assignments merely covered whatever interest he might have in this after-acquired material. It therefore cannot be said that these assignees are “third persons” within the meaning of the statute.

While the Kahl-Holt Company was introducing evidence, opposing counsel requested the production of its books, “so as to show what the books disclosed as to entries made of sales” to Bevans ; but the court suggested that if counsel wanted the books there was a proper way to get them. There the matter rested until, during the argument, counsel for appellants commented unfavorably upon the failure of appellee to produce its-books; and thereupon counsel for appellee objected, stating that the day following the call for them the. books were in court, but that no request was made for them. The court, suggesting that appellants were as much responsible for the failure ro introduce the books in evidence as was the appellee, declined to penult further comment. This ruling is here challenged as error. There was no real conflict in the evidence as to the character of the sale by tbe Kahl-Holt Company to Bevans, nor was the evidence that the material here involved had not been paid for disproved. In the circumstances, therefore, it was not incumbent upon the Kahl-Holt Company to introduce other evidence which was within reach of apjiellants, and such was the purport of the ruling of the trial court.

One more matter requires notice. Appellant John Gill & Sons was one of the general contractors on the postoffice work, but it developed at the trial that this firm was in no way interested in this suit. The court therefore instructed the jury, with the acquiescence of all parties, that “the only defendant against whom judgment is sought is the W. G. Cornell Company.” Evidently through inadvertence, however, the verdict and judgment were made to include Gill & Sons. While the record fails io show- that this matter was called to the attention of the trial court, or that it was made the subject of an assignment of error, the interests of justice so clearly demand that the mistake be rectified that we shall reverse the judgment as to this appellant, but without costs.

.Judgment reversed as to appellant John Gill & Sons and affirmed, with costs, as to appellant W. G. Cornell Company.