Clifford v. W. Hartford Creamery Co., Inc.
| Citation | 153 A. 205 |
| Court | Vermont Supreme Court |
| Decision Date | 07 January 1931 |
| Parties | CLIFFORD v. WEST HARTFORD CREAMERY CO., Inc. |
COPYRIGHT MATERIAL OMITTED
Appeal in Chancery, Windsor County; John C. Sherburne, Chancellor.
Suit by Artemus P. Clifford against the West Hartford Creamery Company, Incorporated, in which a receiver was appointed for the defendant. From a decree distributing the assets of the defendant, the Richford Savings Bank & Trust Company and others, claimants, appeal.
Affirmed and remanded.
Argued before POWERS, C. J., SLACK and THOMPSON, JJ., and GRAHAM, Superior Judge.
George L. Hunt, of Montpelier, for claimant Richford Savings Bank & Trust Co.
Stanley C. Wilson, of Chelsea, for claimant George W. Lamphere.
Chas. B. Adams, of Waterbury, for claimant Borden Milk Company.
Gelsi Monti, of Northfield, for claimant Northfield Co-operative Creamery.
Raymond Trainor, Paul Gilioli, and Alban J Parker, all of White River Junction, for plaintiff A. P. Gifford and claimant A. M. Peisch.
On July 22, 1926, in a suit brought by Artemus Clifford, a receiver was appointed for the West Hartford Creamery Company, Inc., a Vermont corporation, hereinafter referred to as the creamery company. The creamery company was engaged in the general creamery business at West Hartford handling milk, cream, and butter. The receiver took possession of its property, and continued the operation of the business until May 1, 1928, when it was closed; the property having been so badly damaged by the flood of 1927 that it could not be run at a profit.
On August 15, 1925, the creamery company executed a mortgage on all of its real estate, machinery, and fixtures to the Richford Savings Bank & Trust Company, hereinafter referred to as the bank, to secure the payment of a demand note for $15,700 given by it to the bank, and also to secure "any and all other indebtedness at any time due and owing" from it to the bank. This mortgage was a first mortgage on the property, and at the time the receiver was appointed, there was unpaid principal upon the note of $14,900. The receiver paid the note, the last payment being made on February 25, 1928.
On September 27, 1925, the bank loaned the creamery company $5,000 on a joint and several note executed to it by the creamery company, Arthur L. Dow, and Archie M. Peisch, and indorsed by Arthur L. Dow, Archie M. Peisch, and A. P. Clifford.
On August 27, 1927, the receiver applied to the chancellor for an order of subrogation in favor of Peisch and Clifford to the rights of the bank under said mortgage as to payments made and to be made by them on said note. On September 9, 1927, the chancellor, after hearing, ordered that said Peisch and Clifford "on their payment of the note" are and shall be fully subrogated to the rights of said bank as mortgagee, subject only to the prior rights of said bank. The bank was notified of said hearing, but was not represented at the same.
Peisch had paid $2,500 on the note prior to the order of subrogation. No other payments had been made on the note at that time. On February 27, 1928, the receiver paid $810.10 on the note and a like sum to Peisch to apply on the $2,500 he had paid on the note. The money which the receiver paid was part of the avails of the sale of real estate covered by the bank's mortgage. On March 6, 1928, Clifford paid $1,689.90, the balance due on said note.
The receiver was directed in the order appointing him to continue the business of the creamery company until the further order of the court, and was directed "to issue certificates payable out of the net earnings of said Company, and with the proceeds thereof to pay the necessary expenses of the operation of said Company and to pay all taxes, insurance, and all other expenses properly incurred in operating the business of said Company."
On August 19, 1926, at a hearing held upon due notice to all creditors and parties interested, the chancellor, among other things, made the following order: "The receiver is granted leave to issue his certificates to an amount not to exceed $12,000, which certificates shall be a first lien on all present and future assets in the hands of the receiver, subject only to the first mortgage on the real estate and the payments due patrons, and to wages of employees."
Before the final decree was made, there was a hearing as to priorities claimed by certain creditors, and a finding of facts was made. The chancellor found that prior to the order of August 19, 1926, for the issuing of receiver's certificates, all farmer patrons of the creamery company had been paid, and that the patrons mentioned in the order had reference solely to the accounts of patrons contracted by the receiver in his operation of the business.
The receiver issued certificates, signed by him as receiver, to the bank for money loaned to him and used by him in carrying on the business. At the time of the final decree on January 3, 1930, there were three certificates that had not been paid. There is another certificate for $5,000 issued to the bank on January 18, 1928. This has been paid except for a small balance of interest, the payment of which is provided for in the final decree, so it is not necessary to further consider the same.
One unpaid certificate dated October 4, 1926, is as follows:
The second certificate dated September 6, 1927, is as follows:
The third certificate, dated October 19, 1927, is as follows:
The chancellor found that said three certificates were issued under the order of August 19, 1926.
At the time the receiver was appointed, the creamery company was indebted to the Northfield Co-operative Creamery Company, Inc., Borden Company, and one G. W. Lamphere for dairy products severally furnished by them On May 2, 1927, the chancellor, after hearing their petitions for the same, made an interlocutory order giving their accounts priority over the lien given to the receiver's certificates by the order of the court authorizing the issuance of such certificates. The facts of their claim will be set forth and considered later.
In the findings made before the final decree, the chancellor found that A. M. Peisch and A. P. Clifford should have a first lien upon the creamery company's real estate to the amount of their payments upon the $5,000 note signed by them, and that, subject to their lien, the bank should have a prior lien upon all the remaining assets of the creamery company in the hands of the receiver to, in part, cover said three unpaid receiver's certificates. He further found that nothing could be realized from the assets more than sufficient to meet the debts and claims of Peisch and Clifford and the bank, and, therefore, nothing remained for the Northfield Co-operative Creamery, Borden Company, and G. W. Lamphere.
It is adjudged in the final decree: (1) That said Peisch and Clifford, by way of subrogation under the mortgage given by the creamery company to the bank, have a first lien upon all the remaining real estate of the creamery company in Hartford to secure the payments made by them upon the note for $5,000; (2) that the receiver pay to the bank the remaining cash on hand and deliver and convey to it by proper deeds the remaining assets of the creamery company in his hands, both real and personal, subject to the lien of Peisch and Clifford, but free and clear of all other incumbrances, in satisfaction, so far as may be, of the unpaid receiver's certificates.
From this decree the bank, the Northfield Co-operative Creamery, Borden Company, and G. W. Lamphere have appealed.
The bank, Borden Company, and G. W. Lamphere took and were allowed divers exceptions to the chancellor's findings on the final hearing and failure to find as requested. None of the appellants, however, have filed a bill of exceptions as required by G. L. 1511, 1609, 2258, so those exceptions are not before us. Fire District v. Graniteville Spring Water Co., 102 Vt. 511, 150 A. 459, and cases cited.
The appeals bring the whole case, including all questions litigated in the court below which affect the final decree, regardless of the party raising them, to this court for review. Sheldon v. Clemmons, 72 Vt. 185, 47 A. 796; Essex Storage Elec. Co. v. Victory Lumber Co., 93 Vt. 437, 444...
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