« ПредыдущаяПродолжить »
in absolute good faith. Who can tell, but the man himself, when he intends to quit finally to work on a job, when he has driven the last nail? Can he swear he has quit and file a solemn legal declaration to that effect, and then, if it suits his purposes and will be to his financial advantage, go back and drive a few more nails and then file another legal declaration that in effect says, “I did not quit, I didn't intend to quit, and I made a mistake when I swore I did”? Who must judge when he has fulfilled his contract in whole or as far as he intends to fulfill it, but the contractor himself? And when he has determined this date and by legal declaration, sworn to, filed, and recorded it, by which act of his he confidently expects to acquire a lien upon the property prior to others, by what principle of common sense, justice, and equity will he be permitted, at his own will and volition, after he finds that, for errors and mistakes committed, he has lost out, to solemnly file another declaration, nearly a year after he has lost his right, which in effect says, “I did not cease, I thought I had, but I found
I I had not, for I commenced 'furnishing' again"? What a complete mockery of orderly judicial administration of justice it would be to allow such a thing to be done. It seems to me that no better case of complete estoppel could be presented.
Turning again to Davis v. Alvord, we find it distinctly decided that “occasional repairs, if subsequently made, could not be added to the work performed in the erection of the buildings months before, so as to render the whole work one continued performance, for which a single lien could be claimed within sixty days after the last repairs." By a parity of reasoning, I am persuaded that the shipment by this plaintiff of some extra rolls which it knew could not be delivered, and could not in the very condition of things become part of the building or structure, cannot be added to the material and machinery furnished nearly a year before, so as to render the whole one continued performance for which a single lien could be claimed within 60 days after the last shipment. But, again, the statute only gives this lien for machinery used in constructing, altering, repairing, or removing the structure, and I have shown that it must be proved that it is used for this purpose.
The evidence shows that these rolls were extra ones; that the mill was complete without them; that they were not fixtures, and in my judgment could not be subjects of this lien if they had been delivered in time. And yet again I do not believe that the contractor, knowing the Rolling Mill Company to be dissolved and its successor, the Tin Plate Company, to be in bankruptcy, could possibly, in good faith, make this shipment with any expectation that it could be used in the construction” of the mill. For these reasons I think this mechanic's lien void.
And, now, touching the hypothecation and sale of the bonds: It seems to me from the testimony: That Humbert induced these New York men to organize the original company and locate its plant at Connellsville under representation that a six-mill plant there could be built for $100,000. That they subscribed this sum in stock among themselves, Humbert taking $10,000, and paid it into the treasury of this company and that of the reorganized one, the Tin Plate Company, in cash. That Humbert brought to them Sturgiss' proposition to remove to Morgantown and urged them to accept it, assuring them that a ten-mill plant could be erected there for $150,000, the $100,000 they had subscribed and the $50,000 Sturgiss agreed to take in bonds. That in conveying this proposition Sturgiss constituted Humbert his agent and should be equitably bound by his representations and the inducements held forth by him to effect the purpose designed. That all the details of removal and reorganization were supervised by Sturgiss, who became a stockholder by purchase of part of Humbert's stock, and that the expenditure of the money derived from the stock subscriptions, Sturgiss' bonus, and the sale to him of $50,000 of bonds was to the cent expended by Humbert at Morgantown, under the eye of Sturgiss, while these other stockholders were in New York. That the mortgage had been made for $150,000 under the assumption that the plant would cost $150,000, and would be paid for by the unexpended stock subscription of $100,000 restored to the full amount by the $20,000 bonus, and the proceeds of the $50,000 bonds taken by Sturgiss, and that, for the necessary working capital, the company would have $100,000 of bonds in its treasury to sell. That the representations of Humbert as to the cost of plant proved wholly untrue, and, under his management, the amount stated by him to be necessary for that purpose proved to be wholly inadequate. That after he had expended the $150,000 on the plant, he called on the New York stockholders for money to pay actual outstanding indebtedness, and represented that, if they would furnish $7,500, he could complete and start the plant. That Jacob Meurer, Logan, and Ramsey personally supplied and loaned without security this sum for the purpose. That Humbert's representation in this particular proved to be untrue and the sum inadequate. In consequence he again called upon these New York stockholders for money. That in the meantime a part of the bonds had been sent to Morgantown, and both Humbert and Sturgiss, alike stockholders, had tried to sell them and raise money, but without success. That Jacob Meurer, vice president, proposed to the stockholders that they be assessed on their stock for a sum sufficient to meet the situation, but some of the stockholders objected and refused to submit to such assessment, among the number Sturgiss; that in this emergency, with suits brought by creditors, Jacob Meurer, the vice president, applied to the Kings County Trust Company for a loan upon the bonds of the company as collateral, at least morally binding himself personally to see that the trust company should not suffer loss. That this act on his part was fully known to Sturgiss and Humbert, who had tried to accomplish a loan at Morgantown in much the same way, but had failed. That at first $10,000 was thus secured, sent to Humbert, and expended--this on May 2, 1903. That on May 26, 1903, another $10,000 went the same road, secured in the same way, from the same source and upon the same security, and finally, August 7, 1903, $1,500 more, and still debts multiplied, unpaid, and pressing; that an examination of the books was had, the true condition learned, Logan threw up his hands, resigned the presidency of and his directorship in the company, and went to Europe. These three loans of $10,000, $10,000, and $1,500 were evidenced by demand notes that fully set forth that, if not so paid on demand, the holders thereof should have full power, "without further demand or notice, to sell
, assign, and deliver the whole or any part of such securities, substitutes, or additions, at any brokers board or at public or private sale, at their option, at any time or times thereafter, without advertisement or notice, and also with the right to become purchasers thereof at such sale or sales, freed and discharged from any equity of redemption.” These notes subject to this express contract embodied in them, executed with full knowledge of this stockholder Sturgiss, were carried from May 2, 1903, until October 16, 1903, a period of over five months, when demand was made by the borrower upon Jacob Meurer, the then president of the company, for their payment on the 19th, three days following. On October 7th, nine days preceding, Sturgiss had written defendant Palliser a letter in which he said:
"I cannot and will not advance any money to pay off existing indebtedness. Mr. Meurer and his colleagues have put up, as I understand, $100,000 of the bonds as collateral to secure a loan of $20,000. Whether these bonds were put up to secure a loan made to the Tin Plate Company, and were treasury bonds, or were put up by the bona fide holders of the bonds or not, I do not know, but he and his colleagues must take steps at once to protect the property of the company and their associates as stockholders and bondholders from the claims of the parties here who have ordered suits to be instituted.”
Did he not know that these bonds were put up to secure a debt of the Tin Plate Company? I think he did. If the bonds had been sold to bona fide holders for money, he would have been very quick, I think, to have demanded the application of the proceeds of sale, if sold below par, to have called for explanation, if at par, to know why any debts were allowed to remain unpaid. As I construe this language, it was a plain declaration to the New York stockholders that they must not only pay this loan without any assistance from him, but continue paying debts of the company out of their personal funds. Was there any obligation due to him as either bondholder or costockholder that required them to do this? Meurer very naturally declined to pay these notes on October 19th, and in consequence the $100,000 of bonds were placed in the hands of Adrian H. Muller & Son, auctioneers, and, although expressly by the note contracts not required to be advertised, were so advertised for sale in the Tribune, Post, Times, and Wall Street Journal on the 20th, and sold at public auction on the 21st to R. J. Kimball & Company, brokers. The contention on behalf of defendants is that this broker firm bought these bonds for Frank Logan, and that he is now the owner thereof. On the other hand, it is contended that this sale to Frank Logan is a pretense, that they were, in fact, bought through him by W. J. Logan, the former president and director and then stockholder of the Tin Plate Company, and that the latter so bought them for the benefit of himself and the other New York stockholders, and the sale and purchase were made in fraud of creditors and other stockholders. This contention is now made by Corbin, trustee in bankruptcy, in his answer, and by Sturgiss and his assignee bank in their petition. In this connection, it is proper to consider the facts, shown in testimony by copies from the records, that prior to the bringing of this one in this court, two suits had been instituted in the circuit court of Monongalia county, W. Va., the one by the Dunbar Fire Brick Company and other creditors,
in which the original plaintiff herein intervened and subsequently by order was allowed to withdraw, the other by the Hoovens, Owens, Rentschler Company, the scope of the bills in both of which was an elaborate attack upon the transfer of the property of the Rolling Mill Company to the Tin Plate Company, the execution of the mortgage by the latter, and the sale of the bonds thereunder as being fraudulent and void. To these bills, so similar to the one here, both Sturgiss and Corbin, trustee in bankruptcy, filed elaborate answers, sworn to by them. Sturgiss denies in these answers of his all fraud in these transactions, not referring, however, in detail to the hypothecation and sale of the $100,000 of bonds. On the other hand, Corbin in both answers to these two suits, in direct conflict with the allegations of his answer filed herein, does, in almost if not quite the same words in both, refer specifically to this, and says (quoting from his answer to the Dunbar Fire Brick Company):
"Further answering, respondent says that, for the purpose of completing said tin plate mill, the Morgantown Tin Plate Company borrowed divers and sundry sums of money, namely, of Jacob Meurer $2,500, of W. J. Logan $2,500, and of Dick S. Ramsey $2,500, which remains still due and unpaid, and on the
day of August, 1903, it borrowed from the Kings County Trust Company of New York the sum of $21,500 on a promissory note of the said Morgantown Tin Plate Company, and deposited and placed with said trust company as collateral security to further secure the payment of said sum the $100,000 par value of the first mortgage bonds that still remained in its possession and treasury, which note was a demand note, and payment thereof was demanded in October, 1903, and said Morgantown Tin Plate Company was unable at that time to sell the said bonds or raise the money to pay off said note, which, with its interest and renewals of said note or some parts thereof, amounted on the 22d day of October to the sum of $22,055.67, and thereupon said trust company caused said bonds of the amount aforesaid to be advertised and sold at public auction at 12:30 o'clock at the New York Real Estate salesroom, No. 161 Broadway, by Adrian H. Muller & Son, through Andrew J. McCormack, auctioneer, and said bonds were sold on said day, at said time and place, for the sum of $22,500, and the costs and charges for advertising and selling said bonds amounted to $254, leaving a net balance of $190.33, which was paid over by said bank, and the liability and indebtedness of said Morgantown Tin Plate Company to said bank thereby extinguished, and the sum of $190.33 aforesaid was received by said Tin Plate Company by its attorneys. Further answering, respondent says that he is not informed, and does not know, who became the purchaser or purchasers of the said $100,000 of bonds, nor to whom they were delivered by said Kings County Trust Company, nor who is now the holder of the same, but he avers that, so far as the record of said sale discloses, the said bonds were sold in the due and ordinary course of business and according to the custom and practice in such case in the city of New York, and that such hypothecating and pledging of said bonds to secure said loan, and said sale and delivery were upon their face bona fide, and so far as this respondent or the said Morgantown Tin Plate Company is concerned, were in good faith, and not intended to hinder, delay, or defraud the creditors of the said Tin Plate Company, nor to give any preference to any of its creditors over any other creditors, but only to secure the payment of the debt created at the time the bonds were hypothecated or put up with said Kings County Trust Company as collateral security for money said Tin Plate Company borrowed, and which said moneys were actually used by said Tin Plate Company in the construction of its buildings and mill.”
But these quoted allegations were not original with Corbin, trustee. They were almost exact copies incorporated in an original draft pre
pared by Sturgiss, or at least supervised, corrected, and interlined by him, of an answer of the Morgantown Tin Plate Company to the Dunbar Fire Brick Company bill.
After Sturgiss had purchased these claims involved in these two suits brought in the state courts in which these answers were filed, they were, on motion of the plaintiffs and with the consent of defendants, dropped from the docket. The property of the Tin Plate Company was, in the bankruptcy proceeding about June, 1904, appraised regularly by appraisers at a value of $84,100, as shown by a letter of the trustee filed in evidence; that at that time it was not expected to sell at public auction for more than $50,000 to $75,000, and, if the creditors assailing the transfer of the property, the mort te, and sale of the bonds, on the grounds of fraud, in these two suits in the state court should succeed, little or nothing could be realized on such bonds either those held by Sturgiss or by any one else. It is not denied that Frank Logan, the alleged purchaser of the bonds, is the brother of W. J. Logan, and that doing business with his brother to an extent, at least, the payment therefor was directed to be charged to their funds in bank standing in the name of the brother W. J. Logan.
There is evidence tending to show statements made by Jacob Meurer and Palliser indicating an interest on their part in the purchase and ownership of these bonds, but such interest and the utterances alleged are expressly denied by them. In this condition of affairs, when a sale of the property in bankruptcy proceeding, at a ruinous sacrifice, seemed inevitable, Sturgiss, naturally enough, sought ways and means to save himself. He first sought to buy up the stock and bonds of the company. By communication with Palliser, he ascertained that the latter could control and negotiate a sale of these or a part thereof, and as a consequence he took an option from Palliser to purchase $75,000 of the bonds and 825 shares of the stock for 30 days at $30,000, for which option he paid $1,000. Upon consideration, however, he was not satisfied to buy less than the whole amount of the bonds and forfeited the option. Subsequently he offered $35,000 for the whole $100,000 thereof and said stock. Palliser informed him that his client who held them declined this proposition, and thereupon the negotiation fell through. Sturgiss then entered into some kind of contract, which is not disclosed, with the American Tin Plate Company. By this contract he agreed to buy the property of the Morgantown sin Plate Company at the sale thereof to be publicly made and sell it to said American Tin Plate Company, it may be assumed, at an agreed price free from incumbrances. This agreed price must have been in the neighborhood of $130,000, for he admits in his testimony that the $200,200 which he paid for the property finally was over $70,000 more than he had agreed to sell it for.
The property was sold in the bankruptcy cause and, to the surprise of all, was knocked down at $154,200 to one John G. Frazer. Sturgiss filed an upset bid of $160,000, and on his motion the bidding was reopened in court, and there sold to him, Sturgiss, at $200,200. Frazer then came in, filed upset bid, and on his motion this sale was set aside, bidding reopened and sale made to Frazer for $220,000, Sturgiss bidding as much as $219,900. This last sale to Frazer was excepted