Court Opinion

ID: 7967348
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:51:49.678654+00
Date Added: 2024-06-11T16:34:40.853727
License: Public Domain

Vanderburgh, J.
The Anchor Manufacturing Company, a corporation engaged in the manufacture and sale of barrels and barrel stuff at Detroit, Mich., had, prior to June, 1887, as a part of its business, been engaged in furnishing goods in their line to dealers and manufacturers in the city of Minneapolis. At or about the date referred to it was determined by that company to establish a separate department of their business there, and place it in the hands and control of a resident manager. Accordingly a contract was made between the company and Charles E. Cottrell, one of the defendants, dated June 29, 1887, containing the following provisions: “Whereas, said Anchor Manufacturing Company is desirous of selling barrel material at Minneapolis to the best advantage, and the said Cottrell, either for himself or for some firm that he may organize hereafter, desires to handle the same, upon the terms hereinafter named, therefore said Anchor Manufacturing Company does hereby sell and assign to said Charles E. Cottrell all the barrel material and •other property connected with the business at Minneapolis, and will ship to said Cottrell, upon his order, further material, from time to ••time, to the extent that may from time to time be agreed upon. Said Cottrell on his part agrees that for all shipments so made and for said ($2,500.00) said Anchor Manufacturing Company may draw *553upon him drafts payable at such times as may be expedient, and drafts drawn for material hereafter shipped shall be with bill of lading attached. In case the Anchor Manufacturing Company should, in addition to said drafts, make other drafts for accommodation purposes, the said Anchor Manufacturing Company, if said Cottrell accepts the same, agrees to see that said drafts are protected, and means provided for the payment thereof. And in case material is not sold so as to take up drafts given for the shipments aforesaid, the Anchor Manufacturing Company will also protect the same. The Anchor Manufacturing Company hereby guaranties a profit on the business that shall equal a salary of one hundred dollars per month, and the necessary hotel, boarding, and traveling expenses; and it shall be at the option of either party, until final settlement of the business herein referred to, to make that the measure of profit obtained by said Cottrell from the business. Prices for barrel material shall be as may be agreed, from time to time, or, in the absence of specific agreement, at the prices directed by the Anchor Manufacturing Company. It agrees further that it will hereafter repurchase from said Cottrell any of the material that he may have on hand at such price as shall protect him and yield him the profit above named. This agreement to continue until written notice by either party terminating the same.”
In pursuance of this agreement, Cottrell immediately undertook the management of the business at Minneapolis, under the name of Chas. E. Cottrell & Co., and so conducted it thereafter with the knowledge and consent of the Anchor Company, whose officers were kept advised of the nature of his business. And in the course of the business, in connection with that company, and for and in behalf of that company, as well as for expenditures by him made in his department, he had at the time of his assignment in controversy here contracted a large indebtedness in the name of C. E. Cottrell & Co., amounting to more than $90,000. During all that time he was acting under the advice of the officers of the Anchor Company in disposing of its goods and raising money, in pursuance of the contract, accounted for the proceeds, reported to them regularly, made drafts upon them, and accepted their drafts to a large amount. On the *55427th day of March, 1890, Cottrell made the assignment referred to' for the benefit of his creditors. The assigned property consisted chiefly of a leasehold interest in land upon which he had erected in. the year 1887. costly buildings for the manufacture of barrels, and the machinery and fixtures appertaining thereto. The shop had been operated by Cottrell in connection with the business transacted, for the Anchor Company, and the expense of erecting, furnishing, and conducting it had been paid out of funds received in the course of that business. The expenditure was made in 1887, by and with the advice of the officers of the company. It was not authorized by the contract, nor ever formally approved by the directors of the company; but there is no evidence of any fraud or concealment in the' matter on Cottrell’s part. The funds of the company, derived in the-usual course of business, were applied to the payment of the cost and running expenses of the shops; and all this was reported to the company, and was treated by all concerned as an extension of the business in Cottrell’s charge. Knowledge of the state of the business between the company and Cottrell is fairly attributable to the company, and its long-continued acquiescence must be deemed as equivalent to consent and approval on the part of the corporation. Deane v. Hodge, 35 Minn. 146, 152, (27 N. W. Rep. 917.) And, as against third parties extending credit to Cottrell, the Anchor Company, which was not known in the transactions with his creditors, will not now be permitted to set up a claim that he is a trustee ex maleficio for the company as respects the assigned property, which consists chiefly of the shops and fixtures above referred to. And Cottrell testified on the trial (and his evidence was not contradicted or questioned) that during all the time covered by his correspondence, extending from the commencement of the business to the assignment, there was no time when the remittances to him for the buildings ever balanced the account between him and the company, or his acceptances held by the company; and these acceptances made by him, held and negotiated by the company, and not paid by it, constitute the indebtedness to secure which he made the assignment; and that his liabilities on account of the Anchor Company far exceeded the sums advanced by the latter company for the erection of the buildings. The plain*555tiff is the holder of a claim against the Anchor Company, now reduced to judgment, which accrued in 1890, and he brings this action to-enforce the lien of his judgment against the property assigned to the-defendant Booth by Cottrell on the ground that he is a judgment-creditor of the Anchor .Company, and because the funds of that company were used in erecting the buildings. The action was dismissed by the court at the hearing for want of equity, and we think rightly,, on the bare statement of the facts, the substance of which is stated: above. No trust is raised in his favor under the statute, for his debt did not accrue till long after the money was advanced, and no valid reasons are suggested why, on any ground, he should be entitled to the relief asked. •
Order affirmed.
(Opinion published 51 N. W. Rep. 616.)