Artemus P. Clifford v. West Hartford Creamery Co., Inc

• Decision Date: 07 January 1931
• Citation: 153 A. 205,103 Vt. 229
• Parties: ARTEMUS P. CLIFFORD v. WEST HARTFORD CREAMERY CO., INC
• Court: Vermont Supreme Court

153 A. 205

103 Vt. 229

ARTEMUS P. CLIFFORD v. WEST HARTFORD CREAMERY CO., INC

Supreme Court of Vermont

January 7, 1931

May Term, 1930.

Necessity of Bill of Exceptions To Make Available Exceptions to Chancellor's Findings and Failure To Find as Requested---Appeals in Chancery---Subrogation---Right of Sureties to Subrogation as against Mortgagee Making Advances on Receivership Certificates---Receivers---Title Court Acquires in Property on Appointment of Receiver---Effect on Vested Liens---Authority of Court with Respect to Receiver's Certificates---Priority of Liens---Status of Receiver's Certificates with Respect To Being "Other Indebtedness" under Mortgage---Status of Receiver---Effect on Title to Property by Appointment of Receiver---Liability of Receiver---Actions against Receiver---Administration of Property Assumed by Court---Requisites to Legality of Contracts of Receiver---Persons Dealing with Receiver Chargeable with Knowledge of Extent of His Authority---Receiver's Certificates Creating Preference---Duty of Person Loaning Money to Receiver as to Ascertaining True Situation---Recital in Receiver's Certificate as to Lien---Relative Rights of Surety Paying Debt of Another and Secured Creditor---Negotiable Instruments Act---Liability of Accommodation Maker to Holder for Value---Act Applicable Only to Negotiable Instruments---Relation between Accommodation Maker and Party Accommodated Not Affected by Act---Payment of Part of Proceeds of Mortgaged Property to Surety Entitled to Subrogation---Court without Power To Give Unsecured Creditor Preference over Receiver's Certificate or Claims of Other Unsecured Creditors----Statutes---Intention of Legislature Controlling---Manner of Ascertaining Meaning of Word Used in Statute---Meaning of Same Word Used in Different Sections of Same Act or in Statutes in Pari Materia---Status of Acts Regulating Creamery Companies in Dealings with Producers of Milk and Cream---"Patron" as Used G. L. 5732.

1. Exceptions to chancellor's findings and failure to find as requested, held not before Supreme Court, where no bill of exceptions was filed by appellants as required by G. L. 1511 1609, 2258.

2. Appeals in chancery bring whole case, including all questions litigated in court below which affect final decree regardless of party raising them, to Supreme Court for review.

3. Appeals in chancery bring up for review only questions of law.

4. In considering questions of law on appeals in chancery, Supreme Court must take undisputed facts as they appear in record and facts found by chancellor.

5. Subrogation is an equity called into existence for purpose of enabling party secondarily liable, who has paid debt, to reap benefit of securities or remedies creditor may hold against principal debtor.

6. Right of subrogation is favorite of law, and tendency is to extend rather than restrict its application.

7. Subrogation is not confined to ordinary relation of principal and surety, but arises whenever one man is compelled to pay debt for which another is primarily liable and which, in equity and good conscience, should have been discharged by latter.

8. Where individual accommodation signers of note of company which was principal debtor, were obliged to pay balance due on such note to bank holding note secured by mortgage, held that they were subrogated to rights and security of bank under mortgage for amount so paid, and bank making advances on receiver's certificates to finance business carried on by receiver of company had no priority therefor over such sureties.

9. Court appointing receiver receives property impressed with all existing rights and equities of creditors and relative rank of claims and standing of liens remain unaffected by receivership.

10. Appointment of receiver vests in court no absolute control over property, and no general power to displace vested liens.

11. Court has power to authorize receiver of corporation to issue certificates on which to borrow money for carrying on corporation's business, but in case of private corporations which owe no duty to public, has no authority to give receiver's certificates priority over prior existing liens unless necessary to preserve corporation's property.

12. Court has no authority to order issuance of receiver's certificates on which to carry on business of private corporation and to give them priority over prior existing liens without consent of holders.

13. Certificate issued by receiver of corporation which was then indebted to bank on note secured by such company's mortgage was not "other indebtedness" due and owing from such mortgagor within clause in mortgage securing mortgagee for all "other indebtedness" at any time due and owing mortgagee by mortgagor.

14. Ordinary receiver is not an assignee nor agent of corporation of which he is appointed receiver, but a ministerial officer appointed by court to take possession of property in litigation and hold it intact until relative rights of all parties interested can be determined.

15. Title to property is not changed by appointment of a receiver.

16. Receiver is not personaly liable for acts done under and in conformity to orders of court, but only in his official capacity.

17. Actions brought against receiver as such are actions against receivership or property in his hands.

18. When court appoints receiver to hold property of corporation court itself assumes administration of estate.

19. Receiver can make no contract effectual against estate of which he is receiver which is not first authorized or subsequently ratified, by court.

20. Those who deal with receiver are charged with knowledge of extent of his authority.

21. Receiver's certificates creating preference cannot be issued except upon order of court.

22. Court's order authorizing issuance of receiver's certificates creating preference must determine extent to which certificate holders are entitled to priority lien.

23. Person loaning money to receiver on his certificates is put upon inquiry as to all that has been done in litigation in which certificates are authorized, and is charged with notice of all subsequent proceedings therein.

24. Person loaning money to receiver on his certificate, failing to ascertain condition of assets with respect to encumbrances, takes risk.

25. Although receiver's certificate in express terms states that it is "a lien prior to all other claims against the real and personal property" in receiver's hands, "except wages, taxes and payments due patrons," such certificate does not have priority over mortgage to which order authorizing issue of certificate makes it subject, since it is court's order and not act of receiver that determines lien receiver's certificate shall have.

26. One who is obliged to pay whole or part of debt of another is not entitled to be subrogated to rights or securities of creditor until all secured indebtedness has been paid.

27. Under Negotiable Instruments Act, accommodation maker is primarily liable to holder for value, notwithstanding holder at time of taking instrument knew him to be an accommodation party.

28. Negotiable Instrument Act applies only to negotiable instruments.

29. Relation between an accommodation maker and party accommodated is that of principal and surety, with right of surety to be subrogated to rights of creditor on payment of principal's debt, Negotiable Instrument Act having made no change in this relationship.

30. That mortgagor's receiver, in paying part of proceeds of mortgaged property to surety entitled to subrogation, anticipated by a few days payment of note secured by mortgage in full, held not harmful to mortgagee.

31. Court was without power to give debt of unsecured creditor preference over receiver's certificates and claims of other unsecured creditors.

32. In construing statutes, fundamental rule is to ascertain and give effect to intention of Legislature.

33. In determining meaning of particular word in statute, intention of Legislature is to be ascertained from consideration of whole and every part of statute, subject-matter, its manifest object, history of its enactment, trend of previous legislation upon subject-matter, and evils to be corrected.

34. When same word is used in different sections of same act, or in statutes in pari materia, it will bear same meaning throughout, unless it is apparent that another meaning was intended.

35. All of acts in regulation of creamery companies in their dealings with producers of milk and cream are in pari materia, and are to be considered as one statute in determining meaning of word "patron" as used therein.

36. Word "patron" as used in G. L. 5732, giving "patrons" of creamery first lien on real estate of creamery, and certain precedence over creditors other than patrons, means producers of milk or cream who furnish or deliver same to creamery, and applies to them only.

37. "Companies," coming within the meaning of G. L. 5723, defining "company" as person, partnership, unincorporated association or corporation whose principal business is, or who is devoting substantial portion of time to, operating creamery or condensed milk factory or of contracting for dairy products, held not "patrons" of creamery, entitling them to lien and preference given to patrons of creamery by G. L. 5732.

APPEAL IN CHANCERY from decree of distribution in suit brought by Artemus P. Clifford against the West Hartford Creamery Company, Inc., in which a receiver was appointed for the defendant. Heard on pleadings and findings of fact by the chancellor at the December Term, 1929, Windsor County, Sherburne, Chancellor. From the decree of distribution, Richford Savings Bank and other claimants appealed. The opinion states the case.

Decree affirmed, and cause...