Weightman v. Washington Critic Co.

4 App. D.C. 136, 1894 U.S. App. LEXIS 3329
CourtCourt of Appeals for the D.C. Circuit
DecidedOctober 1, 1894
DocketNo. 86
StatusPublished
Cited by1 cases

This text of 4 App. D.C. 136 (Weightman v. Washington Critic Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weightman v. Washington Critic Co., 4 App. D.C. 136, 1894 U.S. App. LEXIS 3329 (D.C. Cir. 1894).

Opinion

Mr. Justice Shepard

delivered the opinion of the Court:

The first question for determination is the right of George Hill, jr., to have satisfaction of his judgment against the Evening Critic Company out of the proceeds of the sale of the press, franchise and other property of the said corporation, which passed into the possession of the Washington Critic Company, and was by it mortgaged to secure the bonds issued by it, and now in the possession of other claimants of the fund. The auditor erred in his conclusions with respect to this claim. Hill was a bona fide creditor of the Evening Critic Company, and though it cannot be said that the property of that corporation constituted a trust fund charged specifically with the payment of his debt, yet he had an equitable right to subject it to the satisfaction of his debt as against all other persons than bona fide creditors and purchasers. Hollins v. Brierfield Coal & [143]*143Iron Co., 150 U. S. 371 ; Curran v. Arkansas, 15 How. 304 ; Wabash, etc., Rwy. Co. v. Ham, 114 U. S. 594 ; M. & W. Rwy. Co. v. Branch, 59 Ala. 139.

Under the evidence, in this case it is unnecessary to discuss or determine the rights growing out of Hill’s intervention in the Helm suit, which was dismissed by the original complainant, or of his pending creditor’s bill in No. 11,842. The effect of filing the creditor’s bill, with service of process, would ordinarily be to create a lien in equity upon the property of the judgment debtor. Miller v. Sherry, 2 Wall. 237 ; Freedman’s Sav. & Trust Co. v. Earle, 110 U. S. 710. And the due prosecution of such suit would be a Us pendens, affecting with notice all subsequent purchasers or incumbrancers. Murray v. Ballou, 1 Johns. Ch. 566 ; County of Warren v. Marcy, 97 U. S. 96.

There is, however, no competent evidence to show that the Washington Critic Company succeeded to the title of the Evening Critic Company in the property which came into its possession by purchase or otherwise. It is probable that the shareholders of the old corporation were among the promoters of the new, and considered the property as belonging to them personally and following them into the new one. If so, this was a mistaken view of their legal relations as shareholders to the corporation and its property. The corporation was a distinct entity. It was not even dissolved. And upon dissolution the claims of shareholders would be subordinate to those of creditors. The best that can be said of the claim of title by the new company, in the light of the evidence, is that it came into and held the possession of this personal property by the permission of the old company. This did not confer title. “ Possession is prima facie evidence of title to personal property against everybody but one proving property; that is, against anyone but the right owner.” Magee v. Scott, 9 Cush. 148. The property was plainly proved to have belonged to the Evening Critic Company. This, with proof of his judgment unsatisfied, [144]*144established Hill’s right to subject it thereto. The burden of proof then shifted to those claiming under the new company to show the passage of title to it in some proper manner. Its possession with the consent of the elder corporation was not sufficient. It was incumbent upon them to show something in addition to defeat the rights of creditors. Having no title to the property, the Washington Critic Company could not by the conveyance in trust create one in the trustees for the benefit of innocent bondholders even. Magee v. Scott, 9 Cush. 148 ; Levi v. Booth, 58 Md. 305 ; Tuttle v. Campbell, 74 Mich. 652; Velsian v. Lewis, 15 Oregon, 539.

It follows, then, that in the distribution of the proceeds of the sale — save as to the separate sale of the press, folder and belongings — the judgment of George Hill, Jr., is entitled to preference over all the claimants. As affecting Hill’s right some stress was laid on the argument that certain of the proceeds of the sale arose from the type and certain belongings of the Washington Critic Company, and that it does not appear that, if sold separately, the property subject to his lien would have produced enough to pay off his judgment and costs of suit. It is contended that he should have intervened before sale and asked, as did the intervenor Hutchins, for a separate sale of the several items of property.

Unquestionably this would have been the safer and better course, but the intervenor was not compelled to adopt it. He filed his petition in intervention subsequent to the sale. This made it his duty to show, at least with reasonable certainty, that the property subject to his lien must necessarily have sold for enough to discharge his debt. This, we think, has been done. It is very clear from the evidence that, saving the Press franchise, the property sold had little or no value. This franchise of the United Press was shown to be very valuable, and it is clear that the proceeds of the sale were almost entirely realized from this value. The surplus [145]*145after paying the judgment of Hill will, we think, be largely more than the value of the other property sold with it.

The auditor has, in our opinion, fallen into a slight error in his conclusions with respect to the priority of the lien of certain of the bonds to the lien of Hutchins upon the proceeds of the separate sale of the press, folder, etc. There is no pretence that William B. Webb had any notice of the Hutchins liens and the bonds held by him unquestionably precede the lien of Hutchins for their proportionate share of said proceeds.

The same may be said of the lien of the $5,000 of bonds held by Mrs. Weightman. It is clear that she had no actual knowledge of the existence of the Hutchins lien, but the attempt is made to affect her with the knowledge of her husband. Hutchins sold the property to her husband, who received it and executed the trust deed. He then conveyed to the corporation, which in turn mortgaged it, together with other property, to secure the issue of bonds. Her husband, it is true, suggested the investment in the bonds, but he was not her agent, and did not represent her in the transaction. She paid for the bonds with money of her own, upon the representation, in connection with the certificate of the title company to the same effect that the corporation’s title to all the property was perfect. She sent the money directly to the secretary and treasurer, who executed the bonds payable to her. They were delivered to the husband, who at once sent them to her. She had not instructed the delivery to him. These acts are not sufficient to constitute him her agent to the extent that she may be bound by his knowledge. The mere relation of husband and wife cannot authorize the imputation of his knowledge to her. It has been held that where a conveyance of land was made to a husband and wife as joint tenants, she paying her share of the purchase money out of her separate estate, without knowledge of the existence of a prior unrecorded lien, she could not be charged with notice by reason of the knowl[146]

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4 App. D.C. 136, 1894 U.S. App. LEXIS 3329, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weightman-v-washington-critic-co-cadc-1894.