Dolle v. Cassell

• Decision Date: 26 January 1905
• Docket Number: 1,352,1,353.
• Parties: DOLLE v. CASSELL et al. YORK MFG. CO. v. SAME.
• Court: U.S. Court of Appeals — Sixth Circuit

135 F. 52

DOLLE v. CASSELL et al.

YORK MFG. CO. v. SAME.

Nos. 1,352, 1,353.

United States Court of Appeals, Sixth Circuit.

January 26, 1905

Louis J. Dolle and Constant Southworth, for appellants Louis J Dolle and the York Mfg. Co.

Waight & Moore, for Waight and Ames.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS Circuit Judge.

These appeals were taken-- the first by the assignee of a creditor the second by a mortgagee of the bankrupt, the Mt. Vernon Ice, Coal & Milling Company--from an order made by the District Court on June 8, 1904, declaring the rights of the creditors and of the mortgagee, and directing the distribution of the assets. The subject-matter of these several appeals are so interrelated that it is expedient to consider them together.

The Mt Vernon Ice, Coal & Milling Company is a corporation organized under the laws of Ohio and had engaged in business at Mt Vernon, in that state. Desiring to secure some icemaking machinery, it entered into a written contract with the appellant the York Manufacturing Company for a supply. This contract was concluded October 27, 1902, and provided that the vendor should supply the machinery and set it up in readiness for operation in the plant of the Mt. Vernon Ice, Coal & Milling Company for the sum of $7,375, to be paid in installments. There was in the contract this stipulation:

'It is further expressly agreed that the title to and ownership of the machinery, apparatus or plant herein contracted for shall remain in the York Manufacturing Company until the entire purchase price agreed to be paid, * * * shall be actually paid in cash.'

And there was given the right to the vendor to enter the premises of the vendee and remove the property in case of default. Twenty-five per cent. only of the price of the machinery was ever paid. It was part of the stipulation of the contract that the vendee was to erect the building and make it ready for the reception of the machinery. This contract was never filed as required by the statute of Ohio relating to conditional sales, hereinafter referred to. Four persons named, William Mild, William E. Mild, Charles L. Mild, and Elizabeth Klinkel, were the principal stockholders of the Mt. Vernon Ice, Coal & Milling Company. The company was short of funds wherewith to progress in its operations. It had bought a lot on which it was erecting its building or buildings, and given back to its grantor a mortgage thereon for $1,000 of the purchase money. The title to this lot then stood in the name of William Mild. In order to secure means to carry on the business of the company, the Milds applied to Waight and Ames-- the former being a stockholder-- to assist in raising money by lending their credit as sureties on notes to be given for loans. Thereupon the following agreement was made:

'This agreement, made and concluded this 1st day of November, A.D. 1902, by and between J. B. Waight and Ben Ames, parties of the first part, and The Mount Vernon Ice, Coal & Milling Company, William Mild, William E. Mild, Charles L. Mild and Elizabeth Klinkel, parties of the second part, witnesseth that,

'Whereas, the said The Mount Vernon Ice, Coal & Milling Company, William Mild, William E. Mild, Charles L. Mild, as stockholders thereof, are engaged in the business of conducting a flouring mill and are erecting an artificial ice and cold storage plant in Mount Vernon, Ohio, and expect to conduct the business of a flouring mill, the manufacture and sale of artificial ice, and a cold storage plant, and,

'Whereas, said parties have already invested therein about $12,000.00, and it will be required and become necessary to complete said artificial ice and cold storage plant, to obtain a line of credit for about the sum of $10,000.00, and they are desirous of borrowing said sum, or as much thereof as may be necessary to complete said plant.

'Now, therefore, said first parties, J. B. Waight and Ben Ames, agree to sign as security for said The Mount Vernon Ice, Coal & Milling Company to such persons or banks as loans may or can be made from, for said company for sums not to exceed $10.000.00 in the aggregate, and continue as such security and carry said loan for a period of not to exceed two (2) years, upon the following terms:

'First. Said William Mild, William E. Mild, and Charles L. Mild are to satisfy said first parties that they have already invested the sum of $12,000.00 in said business, and that said business is free from indebtedness.

'Second. Said second parties are to elect said first parties directors of said The Mount Vernon Ice, Coal & Milling Company, they two with two of said Milds to constitute the board of directors of said company, and place their stock in said company in the hands of a trustee to be voted by said trustee for the re-election of said first parties as directors of said company for and

until all the loans upon which first parties are security, are paid and satisfied in full.

'Third. First parties are to be given a first lien upon all the property, both real and personal, of said The Mount Vernon Ice, Coal & Milling Company as security to indemnify them from any and all liability incurred by them on account of their becoming security for said company, or stockholders therein.

'Fourth. In the event of the property of the said The Mount Vernon Ice, Coal & Milling Company, not being sufficient to pay any and all of the indebtedness, upon which said first parties have become liable as security therefor under this agreement, then Elizabeth Klinkel, one of second parties to this agreement, agrees that she will pay any of said liabilities that said property of said The Ice, Coal & Milling Company is not sufficient to pay, and save and protect said first parties from any liability by reason of becoming security as aforesaid for said The Mount Vernon Ice, Coal & Milling Company.

'Fifth. William Mild, William E. Mild, and Charles L. Mild agree that they will give their services to the work of said The Mount Vernon Ice, Coal & Milling Company until any and all liabilities upon which said first parties have, or may hereafter become security for said The Mount Vernon Ice, Coal & Milling Company shall be paid and charged in full, or said first parties released therefrom, and that they will not make a charge against said The Mount Vernon Ice, Coal & Milling Company for said work, or draw therefrom to exceed $15.00 per week, each, for said services until they and all loans upon which first parties are liable, are paid in full.

'Sixth. Said second parties agree to pay said first parties as a consideration for becoming security for them as aforesaid, in addition to paying the interest upon said loans, the sum of $1,500.00.

'Seventh. It is understood and agreed that for and during the time said first parties are liable as security for The Mount Vernon Ice, Coal & Milling Company, upon any of said obligations, they are to have control of said company and the services of William Mild, William E. Mild and Charles L. Mild therein, and upon the payment of said loans, and a release and discharge of first parties from any and all of said liabilities, then said first parties agree to turn over to said The Mount Vernon Ice, Coal & Milling Company and said Milds, all control of said property and all rights or interest that they may have therein.

'In witness whereof, the parties have hereunto set their hands and seals the day and year above set forth.

William Mild. 'William E. Mild. 'Charles L. Mild. 'Elizabeth Klinkel.'

A mortgage without date was made on the same day, November 1, 1902, by William Mild, on the lot above mentioned, to Waight and Ames, conditioned for their indemnification for becoming sureties as contemplated by their agreement. This mortgage was not recorded until July 16, 1903, on which day the Mt. Vernon Ice, Coal & Milling Company made a general assignment for the benefit of its creditors. After giving the mortgage just mentioned, but on the same day, William Mild executed a deed of the lot, intending to convey it to the company, but, as is said, by mistake, the names of Waight and Ames were inserted as grantees. In their petition they offer to surrender to the bankrupt all claims under this deed. The deed was never recorded.

At the date of the agreement, November 1, 1902, no part of the machinery had come to the possession of the ice, coal, and milling company; but it began to arrive in January, and was finally installed in the plant two or three months later.

After the agreement above set forth, of Waight and Ames, five notes were...