Bunnell v. Bronson

• Decision Date: 08 March 1906
• Citation: 63 A. 396,78 Conn. 679
• Court: Connecticut Supreme Court
• Parties: BUNNELL v. BRONSON et al.

63 A. 396

78 Conn. 679

BUNNELL

v. BRONSON et al.

Supreme Court of Errors of Connecticut.

March 8, 1906.

Appeal from Superior Court, New Haven County; Silas A. Robinson, Judge.

Interpleader by Fred B. Bunnell, trustee, and others, to determine the ownership of a certain fund in his possession as between the First National Bank of the city of New Haven and Nathaniel R. Bronson, as trustee in bankruptcy of the E. S. Wheeler Company. From a judgment disposing of the fund, Nathaniel R. Bronson appeals. Affirmed.

Goodwin Stoddard, Seymour C. Loomis, and Albert H. Jente, for appellant. Henry C. White and John Q. Tilson, for appellee.

TORRANCE, C. J. The E. S. Wheeler Company, a Connecticut corporation formerly doing business in New Haven and hereinafter called "the company," was adjudged a bankrupt as of October 1, 1903. The fund in dispute here is the proceeds of certain accounts originally owned by the company. The defendant Bronson, the trustee in bankruptcy of the estate of the company, hereinafter called "the trustee," claims said fund as the property of the company. The other defendant, the First National Bank of New Haven, hereinafter called "the bank," a corporation organized under the laws of the United States, claims said fund as the proceeds of accounts of the company assigned to the bank by the company as security for money advanced before the adjudication in bankruptcy. In December, 1903, the trustee and the bank entered into a contract, the substance and effect of which may be stated as follows: The trustee was to collect all the accounts assigned to the bank, where the particular loans for which said accounts were primarily assigned had been fully paid. A list of said accounts were annexed to said contract and marked "Schedule A." The money so collected, less the reasonable cost of collection, was to be deposited in a designated trust company in the name of "Fred B. Bunnell, Trustee under Schedule A," to hold in trust until it should be determined by the courts to whom the money belonged. The bank was to collect all accounts where the particular loans for which said accounts were primarily assigned had not been fully paid. A list of said accounts was annexed to the contract and marked "Schedule B." The money so collected, less reasonable costs of collection, was to be deposited in the designated trust company in the name of "Fred B. Bunnell, Trustee under Schedule B," to be held in trust until the courts should determine to whom the money belonged. The contract contained a provision that it was made "without prejudice to the rights of either party, and that no rights which either party hereto has to either of said accounts shall be waived, lost, or affected in any way by reason" of said contract. It contained other provisions which it is unnecessary to notice here. On the 16th of May, 1904, Bunnell held in trust under Schedule A the sum of $428.17, and under Schedule B the sum of $4,294.60; and on that day he brought the present action, to have the title to said money determined. Each defendant claimed all of said money. The trial court adjudged that the Schedule A money belonged to the trustee, and about this no complaint is here made. This appeal is concerned solely with the action of the court in adjudging that the Schedule B money belonged to the bank.

The controlling question in the case relates to the validity of the assignments under which the bank claims the fund. The facts bearing upon this question, as stated in the record, are somewhat numerous and complicated and cannot well be condensed into any statement more brief than what here follows:

In 1897 the company made an agreement with the bank under which the bank agreed to loan the company money on its demand notes, for which money the company agreed to furnish the following considerations, to wit: Its notes, promising to repay the money; 6 per cent. interest; a 2 per cent. commission on the amount of each loan; and accounts assigned as security for the payment of the notes, and, in ease of the failure of accounts to make payment within four months, the balance on the loan was to be paid by the company and the loan retired. The commission was given partly because the company did not have such credit as to enable it to borrow without offering special inducements, and partly because the taking of the accounts as security involved on the part of the bank extra bookkeeping in entering payments on a number of small accounts, computing interest, sending out notices, and performing other labor. In these transactions and pursuant to said agreement the course of business was as follows: When the company needed money it arranged for a loan from the bank, and prepared a note on the form furnished by the bank, called the "collateral note form." The company also prepared a list of accounts to be given as security for the loan, which accounts were against persons or concerns who had bought goods of the company, and said list was annexed to said note. The promissory note, called the "collateral note," given by the company to the bank at the time of each loan, contained, in substance, the following provisions: It was made payable on demand after date, to the order of the bank, with interest at the rate of 6 per cent. per annum. It recited that the company had deposited with the bank, "as collateral security for the payment" of said note, or of any other liability of the company to the bank, present or future, "the following property, viz., accounts duly assigned as per list attached," with full power to sell or assign said accounts in whole or in part, at public or private sale, "on the nonperformance of this promise, or the nonpayment at maturity of any of the other liabilities aforesaid, or at any time or times hereafter, without demand, or payment, advertisement, or notice of sale, which are hereby expressly waived," and, after deducting expenses of sale, to apply the proceeds to pay the liabilities of the company to the bank, and return the overplus, if any, to the company. The note contained other provisions not necessary to be stated here. The lists of accounts attached to the note showed the name of the person or concern owing each account, the address of such person or concern, the date of the maturity of the account, and the amount of the account. With the note and list of accounts came an invoice of each account in said list, signed by the company, addressed to the debtor, stating the terms of sale and the fact that the goods had been sold on account of the bank, and that payment must be made directly to the bank. With each invoice, also, there went a typewritten letter upon the paper of the bank, prepared by the company, but signed by the bank, addressed to the debtor, stating that the invoice of goods was inclosed, and requesting the debtor to remit directly to the bank. The note, with the list of accounts, the invoices and letters, were delivered to the bank, and it then placed to the credit of the company the amount of the note, and said amount was at once withdrawn by the company. On the same day the bank mailed to the debtor the appropriate invoice, with the corresponding letter signed by the bank, in one of the bank's envelopes, bearing its name and address. Whenever the company delivered such a note and list to the bank, it credited each debtor whose account appeared in said list on its sales ledger with the amount of the account in question, which credit showed a transfer and not a payment; and the company then transferred said accounts to its transfer ledger, on which all accounts assigned as security to any bank were entered, and there they remained until paid. When the company assigned to the bank for the first time the account of a customer, it wrote to him a letter advising him of the assignment, and inclosed to him a duplicate of the invoice delivered to the bank. At the beginning of each month the...