81 F. 439 (W.D.Va. 1896), Fidelity Insurance Trust & Safe-Deposit Co. v. Roanoke Iron Co.

Citation:81 F. 439
Case Date:September 08, 1896
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 439

81 F. 439 (W.D.Va. 1896)




United States Circuit Court, W.D. Virginia.

September 8, 1896

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Richard C. Dale, for complainant.

Seward, Guthrie, Morawets & Steele, for Crocker Bros.

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John Douglass Brown and Scott & Staples, for Philadelphia Warehouse co.

Griffin & Glasgow, for Mill Creek Coal & Coke Co.

Blair & Blair, for New York & V. Mining & Mineral Co.

Watts, Robertson & Robertson, Lucien Cocke, and Thos. W. Miller, for certain supply lien creditors.

Before SIMONTON, Circuit Judge, and PAUL, District Judge.

SIMONTON, Circuit Judge.

1. The first question brought to our attention is that between Crocker Bros. and the receiver. Crocker Bros. is a firm of brokers in New York, dealing principally in iron. They were sole agents for the sale of the product of the Roanoke Iron Company. Their agency began in 1889. The course of business was this: Crocker Bros. would make contracts for the sale of the iron product of the company, and send orders therefor to Roanoke. The company would fill the orders, shipping the iron direct to the purchaser. This iron never came into the actual possession of Crocker Bros. Crocker Bros. guarantied all their sales, and each month furnished an account current. If the iron company wanted money from the sales at any time, Crocker Bros. furnished it, whether they had made collections on the sales or not. As they were del credere agents, this was reasonable. Until 1893 the business was prosperous, and sales of iron were readily made. But in 1893 business became slack. There was depression all over the country, and the iron company had to borrow money to meet current expenses for labor, supplies, etc. They had sundry interviews with Crocker Bros., and verbal and written communications in 1893. On August 2, 1893, Crocker Bros. wrote to the Roanoke Iron Company as follows:

'We beg to recapitulate terms of agreement decided upon in our various conversations and letters, as follows, viz.: We are to continue as the sole and exclusive agents of your company for the sale of the entire product of your furnaces and mills, collecting the proceeds, and remitting to you in due course. In the conduct of the business, we will advance if and when desired against iron shipped and properly put into our legal possession to the extent of three-fourths (3/4) of the market value of such iron, freight and any expenses to be considered as part of said 3/4 advance, and margins to be kept on such basis.'

The letter then goes into detail as to rendering account sales and accounts current, the rate of interest, the remuneration of the agents. The duration of the agreement is fixed at five years, and thenceforward indefinitely, unless six months' notice in writing be given of its discontinuance. The Roanoke Iron Company to have the right to modify remuneration and the services of the agents by giving ninety days' notice, in these particulars only; none other is mentioned. The commission may be reduced, from 4 per cent. to 2 1/2 per cent. on gross sales, covering only, however, commission for selling, without guaranty of sales, and without any obligation to make advances. In reply, the Roanoke Iron Company approve all the terms but the duration of the contract, which they propose to limit to one year, and after that subject to the six-months notice. This was accepted. Up to that time as has been seen, Crocker Bros. had no possession, actual or constructive, of the product of the iron

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company. They made contracts of sale, which the company filled by shipment from their works in Virginia. Henceforward, when Crocker Bros, made advances, iron upon which advances were made was shipped on the Norfolk & Western Railroad by the iron company, on bill of lading in the name of Crocker Bros., and by their direction, was sent to them at Lambert's Point, Va., where it was stored in the name of Crocker Bros., and marked. Afterwards the place of shipment was changed to a lot in Roanoke, under the complete control of Crocker Bros., and there the iron was in like manner stored and marked. There were 4,000 tons of iron at Lambert's Point, and some 2,000 tons in Roanoke,--some 6,000 tons in all. Certain creditors of the company for supplies claim that this iron is subject to a lien they have under the statute of Virginia, and have insisted that the receiver should take possession of it for this purpose. On this point the receiver asks instructions. All of this iron held by Crocker Bros. was in their possession before the supplies were furnished for which the lien is claimed, except, perhaps, 144 tons.

The supply creditors base their claim upon section 2485 of the Code of Virginia. That section provides:

'All persons furnishing supplies to a mining or manufacturing company necessary to the operation of the same shall have a prior lien upon the personal property of such company other than that forming a part of its plant, to the extent of the money due them for such supplies. And also a lien upon all the estate, real and personal, of such company (plant not excepted), which said last lien, however, upon all such real and personal estate, shall be subject and inferior to any lien by deed of trust, mortgage, hypothecation, sale, or conveyance made and executed, and duly admitted to record prior to the date at which such supplies are furnished.'

The question then is: Is this iron in the possession of Crocker Bros. a part of the personal property of the Roanoke Iron Company? It is evident, both from the reason of the thing and from the words of the statute, that no lien can be acquired by any person furnishing supplies until he has furnished the supplies, and then the lien can only attach on the property at that time and thereafter the property of the company. If, therefore, this iron ceased to be the property of the Roanoke Iron Company before the supplies were furnished, clearly there is no lien. This iron was transferred from the possession of the Roanoke Iron Company, and delivered to Crocker Bros., with a bill of lading, which was a muniment of title. Means v. Bank, 146 U.S. 627, 13 Sup.Ct. 186. Thenceforward the iron passed to them. Under the terms of the contract appearing in the letter quoted above, no provision was made for the return of the iron in specie, in whole or in part, to the iron company. It was to be held by Crocker Bros., to be sold by them, to be kept in their actual possession, and so ready for delivery. The first proceeds of sale were to go to their advances; then all charges were to be deducted; and, after an account for these was made up, then the iron company had a right to the net balance, if any. Even were this the ordinary case of a consignment to a factor, selling under a del credere commission, the title to the iron would have passed to Crocker Bros., and out of the iron company. In Jones on Liens the law is stated:

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'An agent acting under del credere commission has a lien for his advances and commissions. A bill of sale by his principal to him of the goods in his possession is in effect a foreclosure of his lien on them. ' A bill of sale works, constructively, delivery of personal property. It is the delivery which passes the title to personal property. In the present instance there was an actual manual delivery of the personalty, accompanied by a bill of lading,--a muniment of title. But this is not the ordinary transaction between a factor and his customer. Goods ordinarily are sent to a factor for the purpose of sale. That is the sole purpose for which they are sent, and the reason for his possession and control of them. If, pending the negotiations for or the offer of a purchase, he lay out any money for the principal, he can reimburse himself from the proceeds of the sale when made. Such advances, however, are only incidental to the sale, which is the primary purpose and object of his agency. But, as he only has control of the goods to sell them, he has only a qualified property in them, sufficient to protect him in his possession while carrying out the purpose of his agency. But he is not the owner of the goods. Jones, Liens, Sec. 474. He is still the agent of, and under the orders of, his principal, and can be controlled by him. But in the present case the iron was delivered to Crocker Bros. for the purpose of obtaining a loan of money. It was delivered with every formality for the passage of the legal, as well as the beneficial, title to Crocker Bros. True, sales of it were to follow, not, however, under the direction of and for the benefit of the Roanoke Iron Company, but under the control and direction of, and to reimburse, Crocker Bros. Over these sales no control whatever was reserved to the iron company. There is some ambiguity in the contract upon the question whether Crocker Bros. could look to any other means of reimbursement than these sales. What of the property, then, was left in the Roanoke Iron Company? It had the right to an account from Crocker Bros., and on such account a demand for the balance of money appearing due thereon, the balance, a result after reimbursing the loans and payment of the expenses. That is the only interest the iron company had in the transaction.

Now, when we speak of a lien on personal property, we mean something which can be enforced by keeping in possession, or which can be reduced to possession. It must be property visible and tangible, capable of being reduced into possession. But in the present case, when advances for supplies were made, the iron had ceased, as such, to be the property of the Roanoke Iron Company. All that was left of it was an equity to call Crocker Bros. to an account. There is no such thing as a legal lien on an equity. When there is no legal right, there is...

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