Court Opinion

ID: 7938718
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:12:25.901319+00
Date Added: 2024-06-11T16:33:38.288831
License: Public Domain

Grant, J.
(after stating the facts.) 1. Is the Meyer Rubber Company entitled to the amount realized from the sale of the goods sold by it to Snedicor, which passed into the hands of the receiver, on the ground that the title to the goods unsold remained in that company ? A further statement of facts is necessary, in determining this question. This company was a corporation organized under the laws of New Jersey, and doing business in New York and Chicago, its principal office being in New York. One Preston was its general agent at Chicago, and had the entire charge and control of its business there, and was authorized to sell goods. The original contract made through Preston for the sale of goods to Snedicor was dated April 2, 1894, and was the result of prior conversations and correspondence between them. By this contract the title was not reserved. A supplementary verbal agreement was made between them. On June 8th Snedicor wrote to Preston, stating that he was ready to send an order for about 2,000 cases of goods, but, before sending it, he desired that this verbal agreement should be *653definitely understood, and stated his version of it. In reply, Preston wrote, stating that his interpretation was correct, and in the letter said, “Of course, the original eases will, from time to time, belong to us, or be covered finally by a final settlement, as we wrote you first.” The entire amount of the goods shipped to Snedicor was included in the chattel mortgage. Preston went to •Detroit before the bill was filed, and caused this suit to be commenced; himself signing the bill of complaint as agent, and also the verification to it. Preston died April 27, 1895. May 27, 1895, the rubber company, by advice of its attorney, thinking to obtain some benefit by a judgment at law, brought suit in the circuit court for the county of Wayne, and on July 17, 1895, recovered a judgment in the sum of $18,669.82,—the full amount of its claim. Early in January, 1896, an officer of the company in New York wrote to its agent in Chicago to hunt up the correspondence between Preston and Snedicor. The agent did so, and on January 20, 1896, the correspondence was received at the New York office. Before the petition was filed, these goods, with the others, had been sold by the receiver. The rule of law, as stated in Black v. Miller, 75 Mich. 323, is conceded by the learned counsel; but he insists that these proceedings were not taken by the rubber company with knowledge of the above provision of the contract as to the title, and that, therefore, it is not precluded from asserting its claim. The knowledge and acts of Preston bind the company. It is not to be inferred from the fact that Preston was a man of large business, and that he was in poor health at the time the chattel mortgage.was given and-the chancery suit commenced, that he was not aware of the terms of the contract. The taking of the chattel mortgage, the bringing of suit in chancery, and of the suit at law, are inconsistent with any other theory than that the title had passed. The creditor, the debtor, other creditors, and the receiver had acted upon the theory that the title had passed. The written contracts were on file *654in the company’s office, and there is no evidence to show that Preston was not familiar with the terms of sale. The rubber company was also fully informed of the terms of the sale, made by the receiver. If, however, it were true that the company had no actual knowledge of the precise terms of the sale made by its agent, it is in evidence that it did know that Preston did - sometimes make consignment of goods precisely as is now claimed. It was therefore its duty to act promptly in ascertaining what the contract was. The correspondence was under its control, and could have been had by writing for it. Its delay was not excused. Preston elected to treat the transaction as a sale, and his election bound his principal. We think the case is ruled by Thomas v. Watt, 104 Mich. 201, and cases there cited.
2. It is claimed that the taking of security by the deed, • the declaration, and the assignment of the accounts was in fraud of other creditors. There is no testimony to show that Snedicor or the bank acted in bad faith, or with any design or thought of defrauding his future creditors. The one gave and the other received securities such as the law authorizes. The law does not provide for recording or filing an assignment of accounts. Such an assignment or security is therefore valid when made bona fide and without intent to defraud. Preston Nat. Bank of Detroit v. George T. Smith Middlings Purifier Co., 84 Mich. 364. Even if there had been no declaration of trust, the deed was in- fact a mortgage, and could have been enforced as such without the declaration. Jeffery v. Hursh, 58 Mich. 257. The transaction was not a fraud in law. . Fraud will not be inferred from the mere fact that the terms of the security were not stated in the deed, or that the declaration of trust was not recorded.
3. It is unnecessary to determine whether the chattel mortgage covers any more than the $39,000. The circuit judge correctly held that the chattel mortgage was distinctly made subject to the prior assignment of the *655accounts, and that a larger amount than the surplus in the hands of the receiver was realized from the'collectible accounts. The bank therefore had a prior valid lien, and the amount in the hands of the receiver was properly ordered paid to the bank.
The decree is affirmed, with costs.
The other Justices concurred.