Fairbanks Steam Shovel Company v. William Wills

• Decision Date: 10 April 1916
• Docket Number: No. 82,82
• Parties: FAIRBANKS STEAM SHOVEL COMPANY, Appt., v. WILLIAM V. WILLS, Trustee in Bankruptcy of Federal Contracting Company
• Court: U.S. Supreme Court

240 U.S. 642

36 S.Ct. 465

60 L.Ed. 841

FAIRBANKS STEAM SHOVEL COMPANY, Appt.,

v WILLIAM V. WILLS, Trustee in Bankruptcy of Federal Contracting Company.

No. 82.

Argued and submitted December 2 and 3, 1915.

Decided April 10, 1916.

[Syllabus from 642-643 intentionally omitted] Messrs. Elisha B. Durfee, John A. Bellatti, Walter Bellatti, and George B. Scofield for appellant.

Messrs. Elbert C. Ferguson, William Mumford, and John C. Burchard for appellee.

Mr. Justice Pitney delivered the opinion of the court:

This is a controversy arising in a bankruptcy proceeding. On December 30, 1912, a creditors' petition in bankruptcy was filed in the United States district court for the southern district of Illinois against the Federal Contracting Company, a corporation of that state, and on March 25, 1913, it was adjudicated a bankrupt. Between those dates, and on March 6, the Fairbanks Steam Shovel Company, the present appellant, without actual knowledge of the filing of the petition, seized a certain floating steam dredge, then in possession of the Contracting Company at Beardstown, Cass county, which is in the southern district of Illinois; doing this by virtue of a chattel mortgage given by the Contracting Company to appellant on June 8, 1912, the dredge then being in the possession of the mortgagor at Beardstown. After the adjudication of bankruptcy, but before the appointment of a trustee, the bankrupt filed a petition against appellant in the bankruptcy proceeding, setting up that the mortgage was not acknowledged or recorded in Cook County, Illinois, where the principal office of the bankrupt was located by its charter, and for this reason was invalid against the trustee in bankruptcy to be appointed, and praying that appellant might be restrained from selling the dredge, as it threatened to do. The court entered a temporary restraining order, which was served; appellant, without questioning the jurisdiction of the court, appeared and answered, admitting that it had taken possession of the dredge under the provisions of the mortgage, alleging that the mortgage was duly executed and was given to secure a part of the purchase price of the dredge, and that at the time of its execution the bankrupt, through its officers, represented to appellant that its principal place of business was at Beardstown; and further, that, before the adjudication of bankruptcy, appellant took actual possession of the dredge, and thereby perfected its title thereto; and asking that the injunction be dissolved, etc. No trustee having yet been appointed, it was ordered by the court, upon a stipulation between the parties, that the sale should proceed, under an arrangement providing, among other things, that if appellant purchased the dredge, it should hold it subject to the decision of the controversy. The sale was held accordingly, and the dredge was purchased by appellant. Thereafter appellee was appointed trustee in bankruptcy, and was substituted as a party to the controversy in place of the bankrupt. The matter was heard before the referee, who reported in favor of the trustee. The district court overruled exceptions and confirmed the report; and, on appeal, the circuit court of appeals affirmed the decree. 129 C. C. A. 224, 212 Fed. 688. The appeal to this court antedated the act of January 28, 1915, chap. 22, §§ 4 and 6, 38 Stat. at L. 804.

The principal question is whether the chattel mortgage was properly acknowledged and recorded so as to be valid against the trustee in bankruptcy.

The law of Illinois respecting chattel mortgages may be found in chap. 95 of Hurd's Rev. Stat. 1909. Par. 1 provides that no such mortgage shall be valid as against the rights and interests of any third person unless possession shall be delivered to and remain with the grantee or the instrument shall provide for the possession of the property to remain with the grantor, and the instrument be acknowledged and recorded as thereinafter directed. Par. 2 provides that such instrument shall be acknowledged before a specified officer of 'the county where the mortgagor resides,' if a resident of the state, with a proviso that in counties having a population of more than 200,000 (this applies to Cook county), such instrument, 'if the mortgagor is a resident of the state,' shall be acknowledged before one of several designated officers of the town, precinct, district, or county 'in which the mortgagor resides.' By par. 4, the mortgage, when so acknowledged, 'shall be admitted to record by the recorder of the county in which the mortgagor shall reside at the time when the instrument is executed and recorded.'

The bankrupt was incorporated in the year 1905 under a general act (Hurd's Rev. Stat. 1909, chap. 32), the second paragraph of which requires the organizers to make, subscribe, and acknowledge a statement setting forth the name of the proposed corporation, the object for which it is formed, its capital stock, the location of the principal office, etc., which is to be filed in the office of the secretary of state. If the object of the proposed corporation is clearly and definitely stated and is a lawful object, the secretary of state issues to the corporators a license as commissioners to open books for subscription to the capital stock. After the stock is subscribed, directors or managers elected, etc., the secretary of state (¶4) issues a certificate of the complete organization of the corporation. But, before this is done, the corporation must 'file with the secretary of state a statement setting forth the postoffice address of its business office, giving street and number.' (Act of May 10, 1901, Laws 1901, p. 124; Hurd's Rev. Stat. 1909, chap. 32, par. 192.)

Other sections (chap. 32, &Par50 et seq.) contain elaborate provisions to be complied with when the directors of any corporation 'may desire to change the name, to change the place of business, to enlarge or change the object for which such corporation was formed, to increase or decrease the capital stock,' etc. There is to be a special meeting of the stockholders, called on notice mailed to each stockholder and published in a newspaper, and votes representing two thirds of all the stock of the corporation shall be necessary for the adoption of the proposed change; an appropriate certificate is to be filed in the office of the secretary of state, and a like certificate made a matter of record in the county where the principal business office of the corporation is located; and a notice of the change is also to be published in a newspaper for three successive weeks.

The statement made by the organizers of the bankrupt corporation declared: 'The location of the principal office is in the city of Chicago, in the county of Cook, and state of Illinois.' A...