LONG, J.
The
bill in this cause was filed for the purpose of declaring a
certain bill of sale, given by A. Weed & Co. to Hoxie &
Mellor, a chattel mortgage as security for certain
accommodation paper made and indorsed by Hoxie & Mellor, and
used by A. Weed & Co. in their business, and to decree the
same to be a lien upon the logs described in said bill of
sale, and the lumber
and other material manufactured therefrom, and that the same
be declared a trust fund for the payment of such
accommodation paper; to declare the articles of agreement or
sale by said A. Weed & Co. to the South Branch Lumber Company
null and void as against said bill of sale given to Hoxie &
Mellor; that the bill of sale be decreed to be a lien upon
said property in the nature of a chattel mortgage prior to
the purchase of the said South Branch Lumber Company; that a
certain chattel mortgage held by the First National Bank of
Ashland, Wis., be declared to be a lien subsequent to the
lien of the complainants upon said property; and that the
accommodation paper held by the complainants be first paid
out of the proceeds realized from the sale of the logs. The
bill asked for an injunction against defendants restraining
them from interfering, removing, or disposing of the logs,
lumber, lath, shingles, or timber, and for the appointment of
a receiver. Upon the hearing in the court below, a decree was
made from which complainants and several of the defendants
appeal. On November 28, 1889, A. Weed & Co., composed of
Alfred Weed and Paul Weed, who were engaged in the business
of getting out logs, manufacturing them into lumber, and
selling the lumber, made with Hoxie & Mellor the following
contract: "Antigo, Wis., Nov. 28, 1889. This agreement
witnesseth that Hoxie & Mellor, in
consideration of two promissory notes of A. Weed & Co., for
$2,500 each, dated to-day, one due July 15th next, and one
due Oct. 15th next, without interest, hereby agree to advance
to A. Weed & Co. their notes for such amounts and at such
times as will be necessary to carry on A. Weed & Co.'s
business at Ramsay, and for the purpose of logging a certain
four million tract at Ashland. Hoxie & Mellor also agree to
indorse A. Weed & Co.'s notes for $14,000, for payment of
purchase price of above four million feet of timber. It is
also agreed between both parties that the amount of notes
advanced for Ramsay business shall not exceed $70,000 in all
at any one time, and that the amount advanced for Ashland
business shall not exceed $30,000 in all at any one time,
including the indorsement of $14,000 for purchase price of
timber. A. Weed & Co. agree to use Hoxie & Mellor paper at
such places as will not interfere with the collecting of
their (Hoxie & Mellor) other business, and also agree that
all notes shall be taken up by them before Dec. 31st, 1890,
out of the proceeds of sale of stock. HOXIE & MELLOR. A. WEED
& Co." Under this contract notes were advanced by Hoxie
& Mellor to A. Weed & Co., and renewal of such notes was made
by Hoxie & Mellor up to April 5, 1890, amounting to $108,000.
On
March 30, 1890, Paul Weed, who acted for A. Weed & Co., wrote
to Mellor, who acted for Hoxie & Mellor, the following
letter: "Ashland, Wis., March 30, 1890. Mr. E. W.
Mellor, Antigo, Wis. Dear Sir: We inclose the last $3,500
note for signature and return, as per my letter of recent
date. We finished the last of our logging operations on April
2, and they have been very satisfactory. As fast as we market
our lumber we shall retire the notes out, but that will not
be until June or July. We have made arrangements to take care
of our renewals in the mean time. I did not see Bishop but a
few minutes, owing to a mistake, and we having a lawsuit on our hands the following day. Did he take the
logs? Yours, truly, PAUL WEED." To this letter Mellor
replied by letter of April 5th, as follows: "Ashland,
Wis., April 5, 1890. Paul Weed, Ashland, Wis.-Dear Sir: Your
favor of the 30th ult. came while I was away; hence delay in
replying. I return the note herewith, as it is impossible for
me to sign it under existing circumstances. Will explain more
fully when I see you. Expected to see you ere this, and, if
you are not coming down soon, let me know, and I will go up
there, as I must see you ere long. I inclose you also your
note which was renewed. Yours, truly, E. N. MELLOR."
After
receiving this letter, Paul Weed went to see Mellor at
Antigo, and there executed to Hoxie & Mellor the bill of sale
which complainants, by their bill, claim was intended as
security for certain notes indorsed, and thereafter to be
indorsed, by Hoxie & Mellor. This bill of sale is as follows:
"Know all men by these presents, that A. Weed & Co., of
Ramsay, Gogebic county, Michigan, of the first part, for and
in consideration of the sum of seventy thousand dollars
lawful money of the United States to me in hand paid, at or
before the ensealing and delivery of these presents by Hoxie
& Mellor, of the second part, the receipt whereof is
acknowledged, have bargained, sold, granted, and conveyed,
and by these presents do bargain, sell, grant, and convey,
unto the said parties of the second part, their executors,
administrators, and assigns, twenty-eight thousand pine
saw-logs, scaling seven million feet, more or less. Said logs
are now lying and being in the Black river, near Ramsay,
Gogebic couty, Michigan. To have and to hold
the same unto the said parties of the second part, their
executors, administrators, and assigns, forever. And we do,
for our heirs, executors, administrators, and assigns,
covenant and agree, to and with the said parties of the
second part, to warrant and defend the same described goods,
hereby sold unto the said parties of the second part, their
heirs, administrators, and assigns, against all and every
person and persons, whomsoever. In witness whereof we have
hereunto set our hands and seals the fifteenth day of April,
A. D. 1890. A. WEED & Co. [Seal.] Signed, sealed, and
delivered in the presence of GEORGE R. FRASER."
When
this bill of sale was made the logs were where they had been
banked. The driving of them had not commenced, and A. Weed &
Co.'s men were on the ground preparing for the drive.
They continued the work, and drove the logs. The drive
started about the 17th of April, and was finished about the
4th of May. Weed & Co. began sawing the logs about May 5th,
and continued sawing them until some time in September, when
all the logs in controversy had been sawed. The bill of sale
before set out was not filed until the
10th day of May, 1890. On the 11th of June following, A. Weed
& Co. made a contract of sale to the South Branch Lumber
Company of all the merchantable white pine lumber which had
then been sawed from the logs, and all which they should saw
from the logs, and is as follows: "Chicago, Ill., June
11th, 1890. South Branch Lumber Company, Chicago, Ill.: We
will sell you all the merchantable white pine lumber now
piled at our mill at Ramsay; also the lumber from logs now in
Black river and tributaries, and to be sawed at our mill in
Ramsay,-the entire cut being about seven million feet,-for
the sum of $14 per M ft., board measure, f. o. b. cars at our
mill. The 10 ft. c. and better to go in at the same price,
and the 6 and 8 ft. c. and better at $10 per M feet. The mill
culls, [89 Mich. 362] and 6, 8, 10 ft. common and poorer, are
not a parcel of this agreement. The lumber to be all
cross-piled, and grades kept separate, as directed by you. We
will also sell you our extra star shingles at $1.75, and the
6 dimension clear shingles at $2.20 per M, f. o. b. cars at
Ramsay. Lumber to be settled for on the basis of $13 per M on
McClintock's estimate, the first of each month, and you
to give us your ninety-day paper for the same. The lumber to
be manufactured from time to time as directed by you or your
representative; and we shall take proper care in piling and
covering same to prevent staining, and see that no lumber is
piled nearer than 150 ft. of the mill, to protect you in
insurance. When estimates are taken, each pile to be marked,
'The property of the South Branch Lumber Company.' We
also agree to make good to you any expense or loss that you
may be put to by any claims or otherwise made against this
lumber by other parties. Final settlement to be made as per
the price of $14 on the completement of the shipment of all
the lumber. Lumber to be inspected by C. M. E. McClintock,
each paying one-half of the same. We also agree to hold this
lumber in piles until reduced in weight not to exceed 2,500
1bs. per M ft. You also have the privilege of letting this
lumber remain here as long as you wish, providing that it
does not interfere with the necessities of our mill for
piling room. Very respectfully yours, A. WEED & Co. We accept
the above. THE SOUTH BRANCH LUMBER Co. B. F. FERGUSON,
Treas."
After
this contract had been made, and the parties begun to act
upon it, and to ship lumber under it to the South Branch
Lumber Company, a further agreement was made that the South
Branch Lumber Company should take the lower grade of lumber
which should be piled in the piles of lumber made under the
contract of June 11th, and this became a part of the
contract. On ...
