Citizens' Sav. Bank & Trust Co. v. Jenkins

• Decision Date: 15 November 1916
• Citation: 91 Vt. 13,99 A. 250
• Court: Vermont Supreme Court
• Parties: CITIZENS' SAV. BANK & TRUST CO. v. JENKINS et al.

99 A. 250

91 Vt. 13

CITIZENS' SAV. BANK & TRUST CO.

v. JENKINS et al.

Supreme Court of Vermont. Caledonia.

Nov. 15, 1916.

Appeal in Chancery, Caledonia County; Williard W. Miles, Chancellor.

Suit by the Citizens' Savings Bank & Trust Company against Amanda Jenkins and others to foreclose a mortgage. Decree for the orator for an amount less than claimed, and the orator appeals. Decree affirmed, and cause remanded.

Argued before MUNSON, C. J., and WATSON, HASELTON, POWERS, and TAYLOR, JJ.

Joseph Fairbanks and Porter, Witters & Harvey, all of St. Johnsbury, for appellant. Cook & Norton, of Lyndonville, for appellees.

HASELTON, J. This is a proceeding to foreclose a mortgage given by Geo. W. Jenkins and his wife, Amanda, upon real estate held by them as an estate by entirety. No defense was made as to Lang, and when the "defendants" are spoken of he is not included in the term, but George W. Jenkins and Amanda Jenkins are meant. The case was referred to a special master, and on his report the only question was as to the sum due in equity. The master reported in the alternative; and the court of chancery adjudged that there was due the plaintiff $1,129.79, the smaller sum reported conditionally as due, and rendered a decree accordingly. The plaintiff appealed, claiming that the amount due was $2,069.49, the larger sum conditionally named in the master's report. The findings as to the amount due under the mortgage relate to June 8, 1915.

The difference in the conditional findings results from the application upon the mortgage debt of the sum of $798.86, which the plaintiff claims should not have been so applied, but should have been applied upon the individual indebtedness of George W. Jenkins to the plaintiff.

The mortgage on the defendants' estate by entirety also spoken of in the report as their home place, was given July 23, 1907, and was conditioned for the payment to the bank of a note of that date, signed by George W. and Amanda and for the payment of all other demands which the bank might at any time have against them.

Prior to November 2, 1910, George had a portable mill on the mortgaged premises and had been engaged, to some extent, in cutting, sawing, and marketing lumber. On that day he entered into a written contract with the National Flooring Company, a corporation located at St. Johnsbury, by which he sold that company all the sawed lumber then in his millyard, and also all the sawed lumber cut and sawed or to be cut and sawed by him from timber conveyed to him on certain lots in the town of Wheelock. The flooring company, by this contract, agreed to advance him money on his notes. The flooring company had already advanced him $2,200. He was without means to carry on his lumbering operations without financial aid, and as security for the advancements, made and to be made, he agreed to and did give the flooring company a chattel mortgage on all lumber then in his millyard, and on all logs and lumber cut or to be cut from the timber described in the contract; that is, from the timber on the lots referred to in the town of Wheelock. Following this contract of November 2, 1910, it was the custom of the flooring company to make advancements to Jenkins, for him to give it his notes therefor, for it to indorse them over to the plaintiff bank, and for the bank to discount them.

As lumber was delivered to the flooring company by Jenkins, such company from time to time made, to the plaintiff bank, payments representing the purchase price of the lumber so delivered, and these payments were applied by the bank on the notes of Jenkins given by him and indorsed by the flooring company, as already detailed.

At the time of the contract in 1910 and until January or the first part of February, 1912, one Hastings was president and general manager of the flooring company. Then, that company, having become financially embarrassed, shut down its mill, and was thereafter in process of liquidation. Then, Joseph Fairbanks, Esq., became treasurer of the flooring company, and after that time looked after its financial interests and had full charge of its affairs.

In the fall of 1911, shortly before the flooring company shut down its mill, Mr. Jenkins commenced cutting lumber on the mortgaged premises held as an estate by entirety by Mr. and Mrs. Jenkins. Mr. Jenkins wished to ship the lumber that he was then there cutting to the flooring company, and, after two or three interviews, arrangements were made between Mr. Jenkins and Mr. Hastings, the latter acting for the flooring company, by which he was to ship lumber from the home place as he had formerly shipped the lumber from the lots in Wheelock. The arrangement was made in September or October, 1911, and by it the manner of dealing as to payments and advancements was to be the same as had been the manner of dealing in those respects with reference to the lumber from the lots in Wheelock. Mr. Hastings of the flooring company had then no knowledge of the bank's mortgage. After this arrangement was made, Mr. Jenkins shipped to the flooring company nine cars of lumber before February 14, 1912, one car on February 16, 1912, and one car on June 8th following. Lumber from the lots in Wheelock and lumber from the home place were commingled. Between December 22, 1911, and February 3, 1912, the 'flooring company made advances to Mr. Jenkins for which he gave notes that the flooring company indorsed and the plaintiff bank discounted.

Mr. Fairbanks was a director of the bank, and, as soon as he came to take the place of Mr. Hastings in the control of the flooring company, and learned that Mr. Jenkins was cutting lumber from the premises covered by the bank's mortgage, he made known to Mr. Jenkins objections to the advancement of further sums without the consent of the bank. Thereupon, on February 14, 1912, a date already mentioned, Mr. Jenkins, a Mr. Ritchie, who was the bank's treasurer, and Mr. Fairbanks, met at the bank for a conference. At this conference the bank consented to the advancing of a limited amount of money on notes of Mr. Jenkins indorsed by the flooring company. The advancements were to be made for the purpose of enabling Mr. Jenkins to saw out the lumber cut on the mortgaged premises. It was understood at this conference that Mr. Jenkins should continue to ship lumber, and that the proceeds should be applied on his notes indorsed by the flooring company.

On the same day, February 14, 1912, Mr. Fairbanks drew up, and Mr. Jenkins signed, an order by which Mr. Jenkins directed the flooring company to pay the bank the amount due him, for lumber sold and delivered by him to the flooring company, and also whatever might become due from the flooring company to him for lumber which he might sell and deliver to the flooring company in pursuance of the contract of November 2, 1910, the contract which related to the lumber from the lots in Wheelock. The order directed payments to such an amount as might be necessary to pay all of Jenkins' notes given or to be given to the flooring company for advancements under the indicated contract, described as owned by the bank. In consideration of this order of February 14, 1912, the bank, on that day, advanced to Jenkins $225. It made another advancement of $100 on March 19th following. For these advancements Jenkins gave his notes which were indorsed by the flooring company. These were all the advancements made after the order named.

Two days after the order was given—that is, on February 16, 1912—Jenkins shipped a carload of lumber as already stated. This was of the value of $99. When the flooring company shut down its mill, Mr. Hastings, its president, once notified Jenkins not to ship any more lumber "at present." Later Hastings once, and Mr. Fairbanks twice, asked Jenkins to ship lumber to the flooring company. However, after the first notice from Hastings, Jenkins shipped only the one carload hereinbefore stated to have been shipped June 8, 1912. It was of the value of $69.48.

There was no claim before the master that all of the lumber cut from the lots in Wheelock was not shipped to the flooring company. Mr. Jenkins shipped to the Parker & Young Company and B. F. Andrews, Sons & Co. lumber which came entirely from the home place covered by the mortgage of Mr. and Mrs. Jenkins to the bank. The precise dates of the shipments do not appear. However, Andrews, Sons & Co. sent to the plaintiff bank $241.20, which it received June 21, 1912, and which the assistant treasurer of the bank applied on the notes secured by the mortgage of the Jenkinses on their home place. At this time the assistant treasurer did not know of the order of Mr. Jenkins of February 14, 1912.

July 20, 1912, Jenkins gave the bank a written notice...