First Nat. Bank Of Richmond v. William R. Trigg Co

• Court: Supreme Court of Virginia
• Citation: 106 Va. 327,56 S.E. 158
• Parties: FIRST NAT. BANK OF RICHMOND et al. v. WILLIAM R. TRIGG CO. et al.
• Decision Date: 07 November 1907

106 Va. 327

56 S.E. 158

FIRST NAT. BANK OF RICHMOND et al.

v.WILLIAM R. TRIGG CO. et al.

Supreme Court of Appeals of Virginia.

Jan.17, 1907.

1. Constitutional Law — Due Process of Law—Creation of Liens.

Code 1887, § 2485 [Code 1904, p. 1246], giving all persons furnishing supplies to a mining or manufacturing company a prior lien, etc., is not violative of the fourteenth amendment to the federal Constitution, declaring that no state shall deprive any person of life, liberty, or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 10, Constitutional Law, § 940.]

2. Manufacturers — Furnishing Supplies to Manufacturing Company—Lien.

A corporation engaged in the building and sale of ships used in commerce is a manufacturing company within the statute.

3. Same—Waiver of Lien.

The mere taking of a note by one who has furnished supplies does not amount to a waiver of the right to a lien, in the absence of any showing that the note was intended as a waiver, or taken as a payment of the account.

4. Same—Time for Filing Lien.

Code 1887, § 2485 [Code 1904, p. 1246], giving those furnishing supplies to a manufacturing corporation a prior lien, provides that no person shall be entitled to the lien unless within 90 days after the last item of his bill becomes due and payable he shall file a memorandum of the claim, etc Held that, where materials are furnished under a single contract and in fulfillment thereof, the materialman has 90 days from the date of the last item, but if the several items, or a portion of them, are furnished under separate contracts, the lien must be filed within 90 days from the date of the last item under each independent contract.

5. Appeal — Reservation of Objections — Master's Reports—Exceptions.

Exceptions to reports of masters in chancery, upon which assignments of error are made on appeal, are in the nature of special demurrers, and they must be definite and certain.

[Ed. Note.—For cases in point, see Cent. Dig. vol. 2, Appeal and Error, §§ 1620, 1621; vol. 19, Equity, § 910.]

6. Corporations — Insolvency — Administration—Sale of Mortgaged Real Property.

In a suit against a corporation, on the property of which there were two mortgages, the corporation was found to be insolvent, a receiver was appointed, and a sale of the property was decreed, the decree reserving for future determination all questions as to the validity or priority of any claim or lien. The property consisted of real estate and personal property, constituting a shipbuilding plant and so connected and related as to render the market value mutually dependent, and it did not appear that the property could under any circumstances have been made to bring enough to satisfy the mortgages. Held that, in view of such facts, and in view of the fact that although the bondholders were secured by the mortgages they would have been entitled to prove their entire debt as against the fund for distribution, the decree for sale was not erroneous under the doctrine that land should not be decreed to be sold where there appear to be liens binding upon it until the amount of such liens and their order of priority have been fixed and established.

Appeal from Chancery Court of Richmond.

Suit by S. H. Hawes & Co. against the William R. Trigg Company and others, in which a receiver was appointed and the property of defendant 'sold, and to the report of sale the First National Bank of Richmond and another excepted, and from a decree overruling the exceptions, and confirming the report of sale, the excepting parties appeal. Affirmed, and cause remanded for further proceedings in accordance with the opinion.

Geo. Bryan and A. W. Patterson, for appellants.

Eppa Hunton, Jr., for appellees.

KEITH, P. The William R. Trigg Company, a corporation organized under the laws of Virginia for the purpose of constructing, building, and equipping ships, boats, and vessels, on June 1, 1901, executed a deed of trust to the Commercial Trust Company of Philadelphia, as trustee, covering its plant, and including all its machinery, fixtures, and tools, together with all corporate rights, privileges, and franchises, to secure the payment of certain bonds and coupons, amounting to $1,000, 000, bearing 5 per cent. Interest; and on June 14, 1902, another deed of trust was executed by the Trigg Company to the Richmond Trust & Safe Deposit Company, as trustee, to secure a further issue of bonds amounting to $1,000, 000. It contracted also large debts to its employes, and for supplies and material, and, having become greatly embarrassed, Hawes & Co., in December, 1902, filed their bill, setting forth its default in the payment of interests upon the bonds secured by deed of trust, averring its heavy Indebtedness to banks and individuals upon promissory notes and open accounts, its total insolvency, and praying for the appointment of a receiver to take charge of its assets and to finish cer-, tain incompleted contracts theretofore entered into by it.

The answer of the company admits Its insolvency, and consents to the appointment of a receiver; and a decree was entered, referring the cause to a commissioner to state an account, showing the property of the company and its value, the debts due by it, the liens and their priorities, and other matters which need not now be adverted to.

The commissioner returned a report, which was excepted to by the First National Bank of Richmond, Va., and by the Savings Bank of Richmond:

"First. Because the report sustains the constitutionality of the labor and supply lien law of Virginia, whereas the said law Is in conflict with the fourteenth amendment of the Constitution of the United States, which forbids class legislation by any state.

"Second. Because it reports In favor of a large class of alleged supply lien claimants, whereas the property furnished by them to the defendant company was not in its nature supplies necessary to the operation of the plant, but raw material, which was to beworked up Into finished product for the market

"Third. Because the said commissioner holds that the defendant Wm. R. Trigg Company is a manufacturing company, such as the statute in question contemplates, whereas he should have held that said statute did not extend to such a company.

"Fourth. Because the commissioner holds that a supply or labor lien is good if filed within 90 days after the last item of claimant's bill becomes due and payable, without any regard to the connection between said items, whereas such bill must be an open or running account, forming one continuous course of dealing, in order to bring it within the purview of said statute. This exception is directed particularly against the claim of Charles Este and others, on page 63 and seq.

"Fifth. Because the commissioner holds that the taking of a note by the claimant does not affect his right to the supply or labor lien. Indeed, he seems to be inconsistent when he so decides, and then says that the lien for labor or supplies cannot be extended by special credit nor by the acceptance of a note for the amount of the bill or any part thereof.

"Sixth. Because the commissioner appears to have adopted as the law of this case some agreement of counsel whereby the proceeds of the furniture and furnishings reported by the receiver are to be equally divided between the bondholders and the supply lien creditors.

"Seventh. Because the commissioner allows the claim of J. C. Cheatwood, who furnished teams and men to the defendant Trigg Co., whereas the statute does not contemplate a lien In favor of such claimant. And this exception is intended to apply likewise to the claims of John Tyler & Co. and Jos. Hep-pert, who occupy the same position as Cheat-wood.

"Eighth. Because the commissioner has allowed the claim of Warner, Moore & Co. as a mechanic's lien, after rejecting same as a supply lien. This cannot be done, and the claim in question should have been wholly disallowed. Same exception as to claim of Baldwin & Brown and others: Because the commissioner has allowed the claim of the W. B. Bradley Construction Company as a supply lien, whereas said claim is not entitled to such position, as well for reasons applying to other cases already mentioned as because an account for furnishing and driving piles does not come within the statute.

"Ninth. Because the commissioner reports In the alternative as to the meaning of the language 'property forming part of Its plant, ' whereas he should have reported the first position as his conclusion, and as embodying the true rule in this case; and this exceptant asks that said report be amended accordingly.

"Tenth. Because the commissioner allows the claim of Joseph Bryan, trustee, for $20,038.75, on the grounds set out in the exceptions taken by Charles Este and C. C. Knight & Co.

"Eleventh. This exceptant also unites in the exceptions to said report taken by the Standard Oil Company and the Pennsylvania Railroad Company filed In the cause."

On the 23d of May, 1905, the court entered a decree in which it upheld the constitutionality of the labor and supply lien law of the state of Virginia, and declared that the William R. Trigg Company is a manufacturing company within the terms and provisions of that statute, and, except as to certain matters which we shall not now consider, confirmed the report and decreed a sale of the property. On July 12, 1905, the commissioners reported that they had executed the decree of sale, as required, and had offered the property first in parcels and then as a whole; that for all the machinery included in the buildings and upon the premises, Frank Samuel was the highest bidder, the price offered by him being $108,000; and that for the whole plant—that is to say, "the real estate, including the dock, and all the machinery, tools, appliances, etc."—Horatio G. Lloyd, chairman of the committee representing the first and second...