The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1906-05-23

opinion in the matter of the Troy OIL MIL
involving the validity OF an unrecosded
mortgage as against a subsequent simple con-
tract creditor-the opinion containing the
hrst application made by the Courts Of the
Act OF 1898 requiring mortgages 10 be recorded
within forty days in order to be effective as
against such creditors. TIL opinion Is OF fal'
reaching importance to the public, and is
quoted from at length on this point. Asso-
ciate Justice Wood, for the Court, says:
THE D.. A.. Tompklns Company furnished
the machiDery for the Troy Oh Mill under a
contract which provided 1t should retain title
to the machinery until ytn OF the pul
chase money. Tine date OF the contracI IL
Nav II, 1904, but IT was not recorded until De-
cember 9, 1904. 1t provided that shipments OF
power plant machinery were 10 oegln July /,
1904, and of oil mill machinery July 20, 1904.
The only evidence OF the actual date OF dellv.
cry of machinery is the statement OF the pres
ident of Troy Oil Mill that according to his
recollection all the machinery was shlppeo
and on the ground on August ~, isoi, on
which date a note for $4,000 was given 10
First National Bank by the OIL Mill Com
pany, and the proceeds paid on the machin-
cry. The question Is whether the CONTRACT
made with the D. A. Tompkins Company, be-
ing q contract in the nature OF a mortgage,
mol recorded within forty days from the Time
It's execution or delivery, Is & valid lien as
against the bank claiming TO be a subsequent
SlSoiloA sAN
1T was held by the Master and the Circuit
Court Judge that the bank could not assam
the validity OF the passage mortgage con-
tract for failure to record. because 1t dio
not extend credit OF the faith OF the property
therein mentioned. AS far as we can discoH-
er there Is no evidence that credit was note x-
ended on the faith OF the machinery but
even If 1t was not, this could not avail tne
seller OF the machinery. Proof hat a subse-
Quent creditor did not even know OF The ex-
n0unrn hy n n mr. =
corded mortgsge would not avail the mort
gagee, for the reason that the statute makes
no such exception In the protection afforded
10 subsequent creditors without notice. St
not inclined TO Indulge In any attempts at re-
dnement In the Interpretation Of the statute
in order to protec those who from design OF
negligence fail to record their papers and
then when disaster comes set them up against
subsequent unsecured creditors. But tn.
Master and the circuit Judge further held
that actual notice OF the mortgage must be
imputed to the bank from the fact that s. h.
McGhee. the president OF the bank, was also
attorney o. the Troy Oil MIL, and DR.. Neel,
the president OF the oil mill company Was q
director and a member OF the loan committee
of the bank.
"Mr. McGhee says that he had no notice OF
the mortgage contract, and did not even
know from whom the machinery was bought,
when he made the loan, and there Is no EVIL
dence to the contrary. DR.. Neel says: 1 don't
remember making IN statement about the
mill TO bank officers when the $1,000 % note
was given. When q loan ts made TO one indi-
vidually or when he is in any way interested
or connected with the borrower on the loan
board, that one has nothing 10 do with pass
Ing on that loan. Another is appointed ID his
stead. AT the time this loan was made l did
not acQusint the bank With any OF the facts
with reference 10 the Tompkins purchase.
This Is also uncontradicted.
to his client. but obviously M tice is not Inn
puted 10 an attorney in all his personal, pro-
fessional and official connections from the fac,
that one OF his clients has notice. The bank
could not be charged with notice through
McGhee, its president, OF q mortgage OF an
other corporation Of which McGhee was the
attorney, when McGhee himself had no no.
tice of such mortgage. Neel, the president Of
for 1t from the bsnk was not acting as a direc'
tor OF the bank or q ber OF It's loan com-
mittee, but on the contrary bis rslation and
interests were those OF . borrower from the
bank, and there Is no presumption that he In
formed the bank OF the mortgage. The rule
imputing to the principal the agents knowl-
edge, Il is said In Knobelock v. Bank, % S. G.
800, is placed by majority OF courts, including
the agent TO communicate TO his principal eli
knowledge which he possesses material 10 the
principals business, and the presumption
that he has done that duty. Under the oper-
alton Of this reason, what are sometimes call
ed exceptions or qualifications TO the rule
have grown up. For example, an agent Ia not
presumed to have communicated to his prin-
Opal professional condolences received In rep
reeenting q third person (Akers v. Rowan. IS
s. q. 473), or knowledge acquired while acting
for himself or for q third person and not for
the principal (same authority or where the
knowledge is such that, according to human
nature and exp experience, the agent is certain to
conceal or where the agent Is acting In an ad.
versary relation to the principal, or medi-
tates q fraud against his principal or some
third person in his own interest which would
be defeated by disclosure" The knowledge
of Neel as president OF the oil mill company
Ia not therefore to be imputed TO the bank,
: though be was one OF It's directors and q
member Of It's loan com mittee.
But 1t Is insisted that the D. A. mpkips
Company, at all events, has an equity TO re-
quire the bank TO exhaust the s%ureties, on the
note 1t holds, they being directors OF the oil
mill company, before DISABLING the validity OF
the Tompkins Company's contract as q pre-
ferred claim on the machinery. This position
is unsound. The true rnte Is thus stated In Is
shaling being q rule Of equity and having Its
foundation In principles Unnatural justice,
its application will not be enforced when II
would SO operate as to work substantial in
Justice or Injury TO any party In interest.
Thus matshaling will not be APPLIED TO the
detriment OF a third person having an equity
equai or superior to that OF the person seek
ing to invoke the rule" The Tompkins Com
pany has no equity superior to the sureties.
It is true these sureties were directors OF the
Oil mill company. but being sureties they
were not primarily liable for The debt. There
ts no evidence that they had any part. In
keeping the contract Of the record, and II
would not be q uitable TO require them to pay
q debt to the exemption OF the property OF
the principal for the beneft and protection OF
a creditor who had lost his preference by his
own negligence.
"Thls dfsposes Of all the questions involved
In the appeal except the con trov1rsy as the
allowance Of a fee TO the attorney OF the
Tompkins Company. Its contract contain ca
q clause providing in case Of default the
mortgage creditor ,hould have a right ITO
take possession Of the machinery and other
property named, and sell 1t by private or pub
lc sale, after thirty days advertising. and
Without process OF law, and retain any bal
ance that may be unpaid on all notes, togeth-
ney's and other fees connected with collec-
tion, and pay purchaser anv surplus and COL
Loot from purchaser any deficiency"
mo fee was claimed or proved before the
port on this point. Upon the hearing OF the
cause, however, the Circuit Judge ordered
that the Master take testimony and report
D. A. Tompkin's Company's claim, and have
same rank" The First National Bank sub
mits the order was improper, because the
amoun OF claim OF the Tompkins Company
which there was no exception. The general
rule Is that q Court OF Equity may within Its
discretion allow claims to be proved as long
W. Whi she Il SoI Is to oe Be I paid. Mayer n ias " sas smit i5oi II
Rich. Eq. 259. But when all parties have been
heard, a report had been made purportipg to
cover all claims, and no exceptions have been
filed within the time required by law, a cred
itor who then makes application TO have his
claim increased or amended should make
some showing Of excusable neglect, inadvert
ance or surprise, and the other parties to the
cause whose Interests are affected should be
given full opportunity to be heard as 10 the
propriety Of allowing the matter to be re-
opened, and also as TO the merits OF the pro-
posed increase or amendment of the claim.
The record does not indicate that this show