Eureka Iron Works v. Bresnahan

• Decision Date: 08 April 1886
• Citation: Eureka Iron Works v. Bresnahan, 27 N. W. 524, 60 Mich. 332 (Mich. 1886)
• Court: Michigan Supreme Court
• Parties: EUREKA IRON-WORKS v. BRESNAHAN.

27 N.W. 524

60 Mich. 332

EUREKA IRON-WORKS v. BRESNAHAN.

Supreme Court of Michigan

April 8, 1886

Error to Muskegon.

Keating & Dickerman, J.H. Bissell, and Henry M Campbell, for plaintiff.

Smith Nims, Hoyt & Erwin, for defendant.

SHERWOOD, J.

On the nineteenth day of June, 1884, Charles E. Woodard, secretary and treasurer, and H.S. Servoss, president, of the Woodard Manufacturing Company, executed a chattel mortgage upon all its property to the Muskegon Iron-works, a corporation of which said Woodard was also secretary and treasurer, he acting in both capacities by virtue of the by-laws of the corporation. The mortgage was executed to secure the payment of the sum of $4,700. Four thousand two hundred dollars however, was the actual amount then due from the mortgagor to the mortgagee, but inasmuch as the mortgagor was getting goods constantly from the Novelty Works upon credit, the amount was placed at the first sum named, believing that would no more than cover the full amount of credit required to meet their immediate approaching necessities. No seal was attached to the mortgage, as the company had not yet obtained one. There was no formal action, or the record of any action taken, carried on the records of the company authorizing the making of the mortgage; but it was agreed upon and assented to by all the directors and stockholders of the company assembled together, and the mortgage was drafted and executed in their presence. After it was executed, the secretary of the Novelty Works took it, and locked it up in the safe of that company, and filed a copy of the same in the recorder's office in Muskegon city. The mortgage was signed, "THE WOODARD MANUFACTURING COMPANY, by CHARLES E. WOODARD, Secretary and Treasurer. H.S. SERVOSS President." The mortgage was duly assigned and transferred on the twenty-fifth day of October, 1884, to the plaintiff as collateral security for the payment of a debt which the Muskegon Novelty Iron-works owed the plaintiff, of about $8,000, and said assignment was duly filed in the recorder's office with the mortgage. Before the year from the time the mortgage was made expired, the assignee caused the proper affidavit to renew the same to be made and filed as required by statute. In May, 1885, the chattel mortgaged property was attached by creditors of the Woodard Manufacturing Company; judgments obtained on their claims; and said property, under execution issued thereon, was seized, advertised, and sold by the defendant Bresnahan, who was sheriff, to the other defendant, Delano, against the protest and in utter disregard of the mortgage interest of the plaintiff, though fully notified by the record and personally of the nature and character of such interest. It was not sold even subject to the plaintiff's lien. After the sale the plaintiff caused demand to be made upon both the defendants for possession of the mortgaged property, which was refused; and thereupon the plaintiff brought this suit in trover to recover the value of its interest under the chattel mortgage in said property. The declaration contained the usual counts in trover.

The defendants pleaded the general issue, and therewith gave notice that they would justify the conversion of the property under and by virtue of the judgments and execution rendered and issued against the Woodard Manufacturing Company. The cause was tried in the Muskegon circuit before Judge RUSSELL, with a jury; and, under the special direction of the court, a verdict was rendered in favor of the defendant; and the plaintiff brings error.

On the trial the plaintiff's counsel offered in evidence the chattel mortgage, after proving its execution as hereinbefore stated by the mortgagor, which was objected to by defendants' counsel upon the following grounds: (1) Because the president and secretary of the Woodard Manufacturing Company had never been authorized to make the mortgage. (2) Because the secretary of the said company was a heavy stockholder in the Novelty Company, and its secretary and the mortgage made by him from the one to the other as secretary was without the right so to do, and void. (3) Because the mortgage was executed without any authority from the board of directors, acting as such. (4) Because the officers who purport to have executed this mortgage were not competent in law to bind the corporation, and were not authorized expressly or impliedly by the corporation to sign the instrument in its behalf; and because it appears, from the testimony already in, that one of the objects of executing the mortgage was to cover the property to prevent its being attached by creditors, and that this agent for both corporations had knowledge of that fact, and that being secretary and treasurer of the Novelty Iron-works, and a stockholder to the extent named, that it was incompetent for him to execute this mortgage. (5) Because it does not appear that there was ever a delivery of this mortgage from the Woodard Manufacturing Company to the Muskegon Novelty Iron-works. The court sustained the objection, and held that it is not the mortgage of the Woodard...